Debt Ceiling Reform Act
The Debt Ceiling Reform Act would replace the current debt-ceiling framework with a new suspension mechanism (Section 3101B of title 31, U.S. Code) designed to keep the United States from defaulting on its obligations while giving Congress a tighter, more formal process to disapprove Treasury’s use of that suspension. After Treasury certifies that further borrowing is necessary, Congress has a 45-day window to pass a joint resolution disapproving the certification. If Congress does not act, the debt limit remains suspended and can extend for up to two years beyond the original end date, with rules that limit cash reserves and require only debt issuance necessary to meet legal commitments. The bill also creates expedited procedures in both chambers to review and vote on such joint resolutions and adds debt-portfolio transparency by requiring debt data as a share of GDP. A transitional rule provides a path for enactment if the measure is adopted soon after passage. In short, the act aims to prevent default through a Treasury-driven suspension process while giving Congress a more streamlined and time-bound mechanism to block or approve that suspension, with tighter controls on how debt can be issued during an extension and enhanced debt-tracking disclosures.
Key Points
- 1Establishes a new suspension process (3101B) for the debt ceiling triggered by a Treasury certification that further borrowing is necessary; Congress has a 45-calendar-day window to disapprove via a joint resolution.
- 2If no disapproval is enacted, the debt limit suspension continues and can extend for up to two years after the end of the suspension period, with specific rules governing how the extension works and what obligations can be counted during the extension.
- 3Prohibits the Treasury from issuing obligations to build cash reserves during the extension period and requires that any extended borrowing is only to fund obligations necessary to meet legally incurred commitments.
- 4Creates expedited, bicameral procedures to approve or disapprove a Treasury certification: fast-track committee reporting in the House, a near-immediate floor process there, and expedited floor procedures in the Senate with limits on debate.
- 5Requires greater debt transparency by adding to the debt data a percentage of the gross domestic product and showing debt held by the public net of financial assets.