Senator Barbara Boxer (D-Calif.) and Representative Jim McDermott (D-Wash.) have proposed a bill that purports to hold lawmakers’ checks in an escrow account should the federal government miss its obligations to raise the debt ceiling. The proposed “Pay Your Bills or Lose Your Pay Act” appears to be an effort within Capitol Hill to motivate fellow lawmakers to discuss the debt limit agenda instead of waiting until the last minute, as those in the federal government always seems to do.
The call to tie congressional pay to the debt ceiling is very similar to a bill passed in January.. Should Congress not reach an annual budget agreement, lawmakers’ salaries would be cut. The threatening pay cuts got lawmakers moving, as the first budget in four years was passed by the Senate earlier this year.
The “Pay Your Bills or Lose Your Pay Act” comes after the Congressional Budget Office’s prediction on Tuesday that action needed to raise the United State’s $16.7 trillion debt limit is not necessary until after Labor Day, and that in the meantime, the Treasury Department would be managing the nation’s finances to avert the country from defaulting.
However, Treasury Secretary Jacob J. Lew warned in an interview with CNBC News last month that lawmakers must act quickly to protect the country’s credit rating and avoid potentially disastrous consequences if the country were to hit the debt ceiling and default.
In 2011, the last minute resolution of the raising of the debt limit cost the U.S. its AAA credit rating, which was downgraded by Standard & Poor for the first time in the nation’s history. The Bipartisan Policy Center estimated that the 2011 credit score reduction cost the country $18.9 billion in borrowing costs over the next ten years.
“We’re at a critical moment in our economic recovery…but playing politics with the debt ceiling will hurt it all,” Boxer said at a news conference concerning the proposed bill, which was reported by the L.A. Times. “Our economy cannot take any more self-inflicted wounds.”
Krysta is a writer and researcher with Ring of Fire.