The Administration supports the bill's goal of reducing the Nation's
public debt. Indeed, debt held by the public has been reduced by more
than $300 billion since 1997, including an estimated $220 billion in the
current fiscal year alone. Nevertheless, the Administration does have
some concerns about the legislation.
Passage of H.R. 4601 would do nothing to actually reduce debt held by
the public. Every dollar that the bill would channel through a new debt
reduction account will be used to reduce the public debt even if the
bill is not enacted. Actual public debt levels will not be affected by
the legislation in any way.
Nevertheless, the Administration is concerned about the provision
that would reduce the existing statutory limit on the debt. Attempting
to use the debt limit to force a specific action, even one as salutary
as debt reduction, is inappropriate.
The Administration believes that fiscal restraint is best exercised
through the tools of the budget process. Existing enforcement tools such
as the pay-as-you-go rules and the discretionary spending limits in the
Budget Enforcement Act have been key elements in maintaining fiscal
discipline during the last decade. Debt limits should not be used as an
additional means of imposing restraint. Debt is incurred solely to pay
expenditures that have previously been authorized by the Congress and
for the investment of the Federal trust funds. By the time the debt
limit is reached, the Government is obligated to make payments and must
have enough money to do so.
Not only would this legislation be inappropriate, but it could
produce some very serious consequences. If Treasury were prohibited from
issuing any new debt to honor the Government's obligations, there could
be permanent damage to the Nation's credit standing. The debt
obligations of the United States are recognized as having the least
credit risk of any investment in the world. That credit standing is a
precious asset of the American people. Even the appearance of a risk
that the United States might not meet its obligations because of the
absence of necessary debt authority would be likely to impose
significant additional costs on American taxpayers.
The bill also raises separation-of-powers concerns. In Bowsher
v. Synar, the Supreme Court held that Congress may not assign
executive functions to agencies under its own control. The Congressional
Budget Office (CBO) is an agency of the Congress. To the extent that the
bill conditions executive action by the Treasury Department on a
discretionary determination by the CBO, it may run afoul of the rule
established in Bowsher. Alternatively, the bill might be seen as
delegating to the CBO the Congressional responsibility of appropriating
federal funds. To the extent that it gives the CBO authority to "enact"
an appropriations law, it may well constitute an improper evasion of the
bicameralism and presentment requirements that the Court has repeatedly
said are the exclusive procedures by which Congress may exercise its