“This so-called priority plan makes the priorities of Republicans very clear — very clear, I might add,” White House spokeswoman Karine Jean-Pierre said on January 17. People who want safe food, safe skies, safe communities and safe borders.”
Attempting to prioritize payments carries serious political, practical and legal risks. Paying back bondholders may be critical to protecting the foundations of financial markets, but it would make the administration appear to be favoring wealthy investors over retirees, disability beneficiaries and military personnel.
This is subject to legal challenges because the executive branch decides which congressional spending decisions to ignore and which to pass. It could call into question “the balance of power between Congress and the president over spending priorities and the potential for Congress to use the priority in ways it doesn’t want.” Congressional Research Service analysis Published in 2015.
And it might not work. In 2011, officials made rough plans for a more straightforward version of the priority. But the Treasury is concerned about its ability to make payments within its own systems if it needs to cherry-pick between a range of obligations, rather than delaying everything else, not repaying interest and principal. Fed officials thought they could trace the exact time based on the transcripts from that August.
But “until you develop routines and test routines, your comfort level is very low.” said Lewis Roseman is a former Fed employee who worked with the Treasury on contingency planning. The central bank acts as the government’s banker, so it helps make preferential payments.
Even after contingency planning in the 2013 conflict, A High Treasury Officer It called the prioritization a “thorough trial” and said it was an “unacceptable risk”.
It’s also unclear whether prioritization will prevent financial collapse. Markets could retreat even further if the debt ceiling is breached, meaning the U.S. can’t service its obligations, official debt or not.