Debt Ceiling Alternative Act Summary:
The bill consists of two parts:
1) The Default Prevention Act
2) Allowing the Treasury to liquidate certain assets for the purpose of decreasing the debt
a. All mortgages owned or held by Fannie and Freddie
b. Fannie and Freddie Real Estate Owned Properties
c. Mortgage-backed Securities owned by the Fed
d. Federal Real Property
e. Rescission of Unobligated Appropriations balances from 2011 or earlier
The process is essentially this: Exempting interest expense from the debt limit this year basically cuts the amount of money needed to raise the debt limit in half. Rather than raise the debt limit, we provide the Treasury any number of options to cover the remaining portion of the deficit.
Keep in mind; this is not money that could be used by the general fund. All asset liquidation must be used to retire old debt, thus lowering the total debt subject to limit. This would allow the issuance of new debt.
You can find the full text of the Debt Ceiling Alternative Act here.Back to News