Rep. Peters Introduces Bills to Reform Dangerous Debt Ceiling Games, Protect American Economic Recovery

WASHINGTON, DC – Late yesterday, U.S. Congressman Scott Peters (CA-52) introduced his two-part legislative package that will end the consistent fiscal brinksmanship that has jeopardized our continued economic growth.

The first bill, H.R. 3774, the “Protect America’s Credit Act,” would prevent the unnecessary uncertainty that Congress causes the economy by threatening not to pay America’s bills. The second, H.R. 3775, the “Pay Down the Debt Act,” would reduce the national debt by requiring legislators, regardless of political party or rank, to cut the debt if it is rising as a share of the economy.

“Our economy, and the American people, cannot afford for Congress to play games with our national debt. Reckless gamesmanship threatens our global leadership and undercuts our ability to expand opportunities for families here at home,” Rep. Peters said. “This legislation will ensure that the government pays its bills and does not default on its credit. It is still too easy right now for a small faction in Congress to put the entire economy at risk in order to score political points.”

In 2011, the lengthy delay in increasing the debt limit contributed to sluggish economic growth, caused a drop of nearly 2000 points in the stock market, cost taxpayers $19 billion, according to the Bipartisan Policy Center, from higher borrowing costs, and resulted in the first ever downgrade in the U.S. credit rating.

“The legislation introduced by Representative Scott Peters would deal with our nation’s debt and the debt limit in a responsible manner. The legislation would make the debt limit a more meaningful indication of our fiscal health, and establish a mechanism to ensure Congress and the President act in advance of a crisis if the debt is projected to begin growing faster than the economy,” said Maya MacGuineas, President of Campaign to Fix the Debt.

“The current debt limit, tied to a fixed dollar cap, is arbitrary and threatens our economy,” Robert Bixby, Executive Director of The Concord Coalition said. “Tying it to a more meaningful measure such as GDP is a more sensible approach, and we applaud Congressman Peters for advancing that discussion.”

Background on Rep. Peters’ Bills to End the Debt Games:

The two part process will address both the economic danger of debt growing faster than the economy as well as the economic uncertainty caused by consistent threats to breach the debt ceiling.

These bills, which Congressman Peters also introduced in the last Congress, will take specific actions to protect our economic recovery and lower the national debt:

• Index the debt limit to Gross Domestic Product (GDP), so that Congress would not need to increase the debt limit if debt remains stable or is declining as a share of our economy
• If the debt is growing as a share of our GDP, Congress and the President would have to put forward and vote on proposals to reduce the national debt before the debt limit could increase

By eliminating the need to increase the debt limit if the debt is stable or declining as a percentage of GDP, and putting a process in place requiring the President and Congress to act to prevent the debt from growing faster than the economy, this legislation prevents the brinksmanship and last-minute deals to avoid default.

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