"Paul Ryan Endorses ‘Essentially Impossible’ Scheme To Avoid Debt Default"
Republicans anxious to avoid a debt default without actually raising the nation’s debt limit have proposed a scheme that would, in their eyes, allow the government to prioritize debt payments, paying off holders of U.S. bonds first and other programs after. The Bipartisan Policy Center has called such a plan “essentially impossible,” noting that Treasury’s computers aren’t capable of prioritizing payments and that, even if they could, such a scheme would prevent the government from making large portions of its payments, which is still a default on legally owed obligations.
Still, Rep. Paul Ryan (R-WI), the chairman of the House Budget Committee, endorsed such a plan today at the House GOP’s annual retreat in Virginia, Slate’s Dave Weigel reports:
“We believe they have the ability to prioritize,” he said. “I’m speaking for myself — I believe Pat Toomey would say the same thing. There’s disagreement about whether that’s true or not.”
Republicans proposed a similar plan during the 2011 debt ceiling debate, but such a plan simply isn’t feasible. Not only is Treasury incapable of prioritizing, but most of the government’s largest bills are due early in the month even though revenues often come in later. And prioritization wouldn’t change the government’s obligation to make those payments — it would simply delay them until Treasury had enough money to make them.
The conservative American Enterprise Institute says prioritization is unworkable, and multiple Republicans who worked in the Bush administration agree. If “there’s disagreement” over the feasibility of such a plan, it exists solely because Republicans like Ryan and Toomey refuse to acknowledge its impossibility.