House Vote on Debt Ceiling Gives Priority to Creditors

By JONATHAN WEISMAN, NYT

WASHINGTON — The House voted Thursday to allow the Treasury to continue to make payments to foreign and domestic federal creditors and Social Security recipients in the event of a stalemate over the government’s statutory borrowing limit, digging in for another debt ceiling standoff, which is looming in the fall.

The legislation, which passed 221 to 207, would allow limited borrowing to make payments to federal bondholders, then Social Security recipients, even if the Treasury is prohibited from borrowing to finance the rest of the government. No Democrats voted for it, and eight Republicans were opposed.

Republicans said the measure effectively took the threat of a government default off the table if the debt ceiling was breached. But opponents said the bill was unworkable and would do nothing to stave off a messy default and economic chaos once the Treasury exhausted its payment options early this fall. The bill is unlikely to get a hearing in the Senate, and President Obama has promised a veto.

Senator Harry Reid of Nevada, the majority leader, called it “so shallow” that it would fail an eighth-grade model government class.

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