Democrats in the House and Senate pushed a new bill Friday that would overhaul the debt-ceiling process, the Wall Street Journal reported.
The move was timed to capitalize on anxiety over what has become regular brinkmanship using the country’s borrowing limit to try to push other agendas.
Backers of the new bill argue that using the full faith and credit of the U.S. as leverage is irresponsible and tantamount to taking the U.S. economy hostage, the Journal report said.
Late last month, President Joe Biden and his political rival, House Speaker Kevin McCarthy, hammered out an agreement and made sure the rest of Congress was aligned to avoid a June 5 federal default, which would have been the first ever by the U.S.
Biden eventually signed legislation that temporarily lifted the nation’s debt ceiling. However, some investors still remained worried about a potential second U.S. credit ratings downgrade by one of the big-three major credit firms, which had placed the nation on rating watch negative.
“Partisan standoffs over the federal debt limit have become a predictable feature of American political life,” Harvard economics professor Kenneth Rogoff said in a recent commentary.
“The real source of the problem is that politicians today have little incentive to compromise. In an environment of gerrymandered electoral districts and ideologically siloed traditional and social media…, the instability will only worsen in the foreseeable future,” he said. “That could mean more frequent government shutdowns or more restrictions on central bank independence.”
Known as the Debt Ceiling Reform Act, the legislation announced Friday would empower the Treasury Department to continue paying bills for the country’s existing obligations. To stop Treasury’s payments, Congress would have 30 days to pass a veto-proof joint disapproval resolution, which would require a two-thirds vote in the House and Senate.
The bill is sponsored by Sen. Dick Durbin of Illinois, the No. 2 Senate Democrat, and Rep. Brendan Boyle of Pennsylvania, the top Democrat on the House Budget Committee.
“After a near catastrophic default thanks to political games by our Republican colleagues, it’s time to put the debt ceiling in the hands of the Treasury Secretary,” Durbin said, according to the Journal article. “We need legislation to reform the way we address the debt ceiling.”