Full Faith and Credit Act Under Fire
House Republicans have put forth legislation that would prioritize payments of the U.S. government to ensure that our debtors get paid—to ensure that the full faith and credit of the United States remains solid. Hence the name, the Full Faith and Credit Act.
Yet this act has come under fire from liberals as being a “phony fix” to our problem that leaves soldiers, veterans, and the elderly “out in the cold.” The reason liberals decry the Act is that in their minds, any failure by the U.S. government to make any payment it is obligated to make is equivalent to default—in other words, liberals believe that all U.S. obligations are created equal. This, however, is not the case.
Last year, interest payment on U.S. debt took up 6-7% of total outlays. What liberals fail to understand is that the interest rate the U.S. pays on its debt—and thus the percentage of total outlays such interest payments occupy—is determined by the credit rating the United States enjoys (which, until this disaster of a presidency, was a sterling AAA).
If the United States fails to fund social security checks, or paychecks, or welfare benefits, these things simply become I.O.U.’s, and don’t (to my knowledge) accrue interest. On the other hand, if the United States fails to make a payment on its debt (the only instance that would, contrary to liberal understanding, constitute an actual default), it’s credit rating would take a hit, which in turn would result in a higher interest rate required on all future U.S. debt. Thus, failure to make debt payments would create a compounding problem, as it would inevitably mean that a larger portion of federal outlays would necessarily have to go to interest payments, leaving less money to fund the liberals’ treasured welfare benefits.
What’s the real reason the liberals are pissed about the Full Faith and Credit Act? They don’t want to face fact: that soon, they’re either going to have to agree to cut spending in exchange for a deal with Republicans, or figure out how to live within our means as a nation. In their world, spending is a good thing. In ours, it’s brought the economy (and, arguably, the United States) to the brink of collapse. So yes, let’s pass the Full Faith and Credit Act, and leave the blame for all that lies ahead strictly with the Democrats.