Default Prevention Act

Key Points

• This bill creates a five-tier priority system telling the Treasury Department exactly which bills to pay first if the U.S. hits the debt ceiling. It would prevent a default on the national debt by ensuring bondholders and key trust funds are paid before anything else.
• The top-priority "Tier I" payments include interest and principal on public debt, Social Security trust funds, Medicare trust funds, and Medicare program payments. This means seniors' healthcare and retirement benefits would be protected even during a debt ceiling crisis.
• The second tier protects Defense Department spending and veterans' benefits, ensuring military operations and support for former service members continue during a debt ceiling standoff.
• Pay for top executive branch officials (including the President and Vice President) is placed in Tier IV, and Members of Congress are in Tier V at the very bottom. These officials would only get paid after nearly all other government obligations are met.
• The Treasury could issue new debt specifically to cover Tier I payments even when the debt ceiling is reached, and that new borrowing would not count against the debt limit until a new deal is struck.