Full Faith and Credit Act

What it does

This bill requires the Department of the Treasury to prioritize certain obligations if the federal debt limit is reached and provides for a limited increase in the debt limit to fund these priorities.

If the federal government reaches the debt limit, the following obligations must be given equal priority over all other federal obligations:

• the principal and interest on the debt held by the public;

• Social Security benefits;

• pay and allowances for members of the Armed Forces on active duty and members of the U.S. Coast Guard;

• compensation, pensions, and payments for medical services provided by the Department of Veterans Affairs, and

• the Medicare programs.

If the debt limit has been reached and incoming revenue will be insufficient to pay the priority obligations over an upcoming two-week period, the bill requires (1) Treasury to notify Congress of the expected revenue shortfall for the two-week period, and (2) the debt limit to be increased by the amount of the expected shortfall.

If the incoming revenue exceeds the expected shortfall, the excess revenue must be held in reserve and applied to the following two-week period.

Summary by the Congressional Research Service, Jan 25, 2023 (Introduced in Senate). CRS summarizes bills impartially; it does not take positions.