DEBT Act

Bill Number

H.R. 402

Origin Chamber

House

Congress

119th Congress, Session 1

Policy Area

Economics and Public Finance

Status

Introduced

Latest Action

2025-01-14: Referred to the House Committee on Ways and Means.

Last Updated

2025-03-06T16:49:19Z

AI-Generated Summary

Summary of H.R. 402: Debt Explanation Before Taxwriters Act (DEBT Act)

Purpose

This bill aims to increase congressional oversight of the U.S. government's approach to the debt limit by requiring the Secretary of the Treasury to provide advance notice and explanations to key committees in Congress before the debt ceiling is reached or special steps (called "extraordinary measures") are taken to avoid a default on federal payments.

Key Provisions

• Timing and Requirement: The Secretary of the Treasury must appear before the House Committee on Ways and Means and the Senate Committee on Finance between 21 and 60 days before anticipating that the public debt will hit the limit set under existing law (sections 3101 and 3101A of title 31, U.S. Code) or before using extraordinary measures to prevent default.
• Required Explanation: During the appearance, the Secretary must submit a detailed report covering:
• Any extraordinary measures planned to fund federal obligations until the debt limit is raised, including an estimate of the administrative costs of those measures.
• Plans to reverse those measures and any other changes to funding federal obligations once the debt limit is increased.
• Definition of Extraordinary Measures: The bill defines these as specific temporary actions by the Treasury Department, including:
• Suspending sales of certain Treasury securities for state and local governments.
• Redeeming or suspending investments in retirement funds for civil service workers and postal service retirees.
• Suspending reinvestments in government securities funds, the Exchange Stabilization Fund, and the Thrift Savings Fund.
• Issuing debt through the Federal Financing Bank for specific exchanges.
• Suspending new investments or selling assets early in civil service and postal retiree funds.
• Technical Update: Adds a new section (3131) to subchapter II of chapter 31, title 31, U.S. Code, and updates the table of contents for that chapter.

Significant Changes to Existing Law

• This introduces a mandatory congressional appearance and reporting requirement not previously required under current debt limit laws (sections 3101 and 3101A of title 31, U.S. Code).
• It formalizes and expands the definition of "extraordinary measures," which were previously used informally by the Treasury Department during debt ceiling crises, by listing nine specific examples and tying them to oversight obligations.
• No changes are made to the debt limit itself or the process for raising it; the focus is solely on preemptive transparency.

Potential Impacts

• On Government Agencies: The Treasury Department will face additional administrative burdens for preparing reports and testifying, potentially delaying or altering the timing of extraordinary measures. Affected agencies and funds (e.g., civil service retirement and postal retiree health benefits) may experience temporary disruptions in investments or redemptions, though these are reversible.
• On Citizens: Increased transparency could lead to more public awareness and debate about federal debt management, potentially reducing uncertainty during debt ceiling negotiations. However, it might not directly affect individual finances unless a default is averted more reliably.
• On International Relations: By promoting structured oversight, the bill could enhance global confidence in U.S. fiscal stability, as debt limit crises have historically raised concerns among international investors and creditors about the reliability of U.S. Treasury securities.

Main Stakeholders Affected

• Congressional Committees: House Ways and Means and Senate Finance Committees gain direct input and information on debt limit strategies, strengthening their role in fiscal oversight.
• Treasury Department and Secretary: The Secretary is directly obligated to prepare and deliver reports, impacting departmental operations during fiscal deadlines.
• Federal Funds and Beneficiaries: Entities like the Civil Service Retirement and Disability Fund, Postal Service Retiree Health Benefits Fund, Thrift Savings Fund, and Exchange Stabilization Fund may see short-term changes in investment activities, affecting retirees, federal employees, and economic stabilization efforts.
• Broader Government: The executive branch's flexibility in managing debt limits is constrained by added accountability to Congress.

Notable Legal, Constitutional, or Political Implications

• Legal: Strengthens statutory requirements under title 31, U.S. Code, for executive branch actions on public debt without altering the core debt limit framework. It could lead to legal challenges if the timing conflicts with urgent fiscal needs, but it aligns with existing laws on Treasury reporting.
• Constitutional: Reinforces Congress's constitutional authority over federal spending and borrowing (the "power of the purse" under Article I), by mandating executive explanations before unilateral extraordinary measures, promoting checks and balances.
• Political: May encourage earlier bipartisan discussions on raising the debt limit, reducing the risk of last-minute crises that have caused market volatility in the past. It could politicize Treasury actions by requiring public testimony, potentially intensifying debates on fiscal policy without resolving underlying partisan divides on spending.

This summary was generated by AI and may contain inaccuracies. Refer to the official source document for the authoritative text.

Sponsor

Rep. Schweikert, David [R-AZ-1]

Recent Actions

• 2025-01-14: Referred to the House Committee on Ways and Means.
• 2025-01-14: Introduced in House
• 2025-01-14: Introduced in House

Bill Versions

• Debt Explanation Before Taxwriters Act — issued 2025-01-14 — PDF (4 pages)