As part of the stopgap spending bill that would "defund Obamacare," House Republicans have proposed a temporary exemption to the debt limit, ostensibly to prevent the government from defaulting on Treasury securities. But the exemption would protect only bondholders, leaving other creditors at risk should Congress fail to raise the debt limit next month. If the Treasury can't keep the commitments Congress has already made to federal workers, contractors and beneficiaries, it could lead investors to panic, damage Washington's credit rating and exacerbate the fiscal problems the House GOP says it's trying to solve.
The current debt ceiling is $16.7 trillion, but even House Republicans have acknowledged that they can't stay within that limit. The purposefully austere budget they passed in March proposed to add $1 trillion to the debt next year.
Treasury Secretary Jacob J. Lew has said the government will hit the current limit in mid-October, at which point the revenue it collects would cover only about two-thirds of the government's bills. Instead of proposing a higher limit, the House's stopgap funding bill (HJ Res 59) would allow the Treasury to borrow more money solely to make principal and interest payments on Treasury securities. Sen. Ted Cruz (R-Texas) said such a change would guarantee that the government wouldn't be in "default," even if Congress missed the debt-limit deadline.