Default Prevention Act

This bill, called the Default Prevention Act, is meant to make sure the U.S. keeps paying its debt even if the nation hits the debt ceiling. It tells the Treasury to pay the most important bills first and put other bills in line behind them. The top-priority bills get paid as they come due, and lower-priority bills are paid only if the higher ones can still be covered. Pay for Members of Congress is placed in the last tier. The bill also says the Treasury can issue special debt to cover top-priority payments or to be held by certain trust funds, and those issuances won’t count against the debt limit while this is in effect. Treasury must send weekly reports to Congress showing what got paid and what is still unpaid in each tier. Outside these periods, nothing in the bill changes Treasury’s existing authority to set payment order.

Key points

• Who is affected: The U.S. Treasury, federal programs and trust funds that receive higher priority, and Members of Congress (whose pay is last in line).
• What changes: A payment “tiers” system when the debt ceiling is hit; authority to issue special debt that doesn’t count toward the limit to cover top-priority payments; and required weekly reports to Congress on paid and unpaid amounts by tier.
• When it applies: Only when the national debt has reached the legal limit.