The new legislation directs the Treasury Department to borrow money to pay bondholders and make sure Social Security is solvent. This additional borrowing authority would give Treasury the capacity to issue enough new debt to stave off the default date for another month or two, according to calculations by the Bipartisan Policy Center think tank in Washington.
The White House has promised to veto the measure in the unlikely event that the Democratic-led Senate approves it. Even some senior Republicans are only lukewarm supporters at best, and GOP leaders shunned the measure in two prior debt showdowns with Obama.
"If the U.S. government legally commits to paying someone a benefit, or agrees to pay a firm for a good or a service, the U.S. government should fulfill that agreement in a timely fashion," said former Bush administration economic adviser Keith Hennessey. "To do otherwise is taking the first step to becoming a banana republic."
In promising a veto, the White House said in a statement: "This bill would threaten the full faith and credit of the United States, cost American jobs, hurt businesses of all sizes, and do damage to the economy. It would cause the nation to default on payments for Medicare, veterans, national security and many other critical priorities. This legislation is unwise, unworkable and unacceptably risky."
The GOP legislation is most strongly supported by rigidly conservative House Republicans like McClintock, Steve Scalise of Louisiana and Scott Garrett of New Jersey. The idea for such GOP conservatives is that it's more important to make sure the government doesn't default on the "sovereign debt" owed to creditors than make payments on other obligations.
"Paying sovereign debt is not the same thing as borrowing money so that this institution and this town can continue to spend money," said Rep. Jeb Hensarling, R-Texas.
Democrats jumped on an interview with House Speaker John Boehner, R-Ohio, likening the measure to a bankruptcy proceeding.
"Those who have loaned us money, like in any other proceeding, if you will, court proceeding, the bond holders usually get paid first. Same thing here," Boehner told Bloomberg Television.
"This bill means that the United States of America will voluntarily act like a bankrupt corporation and pay China before we pay our troops. How sad," said No. 2 House Democrat Steny Hoyer of Maryland.
White House Program Cuts Up to $1k off Monthly Payments! (3.05% APR)