Yesterday we had an opportunity to chat with California representative Tom McClintock, the chief House sponsor of the Full Faith & Credit Act, a pending bill that would require the Treasury to prioritise debt payments above all other spending.As the debt ceiling fight is certain to drag past the first deadline, nobody wants to be accused of doing something reckless with the government’s pristine credit rating.
According to McClintock, the Treasury already had the ability to prioritise debt payments above others, and that Tim Geithner’s deficit doomsaying is irresponsible.
But this bill would end any question of this: “It would provide a guarantee to lenders that their money is guaranteed.”
He certainly disagrees with the notion that not paying some other domestic bill would be a kind of default: “There is a world of difference between delaying a debt payment and missing a bill.”
And he notes that several states have a law like the Full Faith and Credit Act. As he puts it, just the existence of the law makes borrowing easier. It’s why California can still borrow money despite being “a worse credit risk than Lindsay Lohan.”
For now the bill is in committee, and it will be McClintock’s top priority when Congress gets back from recess next week.
Senator Pat Toomey is pushing the same bill in the Senate, where we understand there are still no Democrats on board.
Related: Why California is the next Greece >
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