Debt Ceiling Alternative Act

To provide that, in the event that the Secretary of the Treasury estimates that the debt ceiling will be reached, the Secretary is required to issue GDP-linked bonds to pay the principal and interest on the public debt and the President is authorized to request the rescission of certain unobligated balances and sell certain mortgage-related assets, and for other purposes. 1. Short title This Act may be cited as the Debt Ceiling Alternative Act 2. Estimate that borrowing will reach the statutory debt limit If the Secretary of the Treasury makes an estimate of net marketable borrowing for a quarter that estimates that the debt of the United States, as defined in section 3101 of title 31, United States Code, will reach the statutory limit during such quarter, the Secretary shall immediately notify Congress of such estimate, and the Secretary of the Treasury shall issue bonds described under section 3 and the President may take the actions described under sections 4 and 5. 3. Issuance of GDP-linked bonds to pay the principal and interest on the public debt (a) In general Upon the issuance of a notification to Congress under section 2, the Secretary of the Treasury shall issue bonds— (1) with an interest rate linked to the nominal gross domestic product of the United States; and (2) the proceeds from which may only be used to pay the principal and interest on obligations of the United States held by the public or the Old-Age and Survivors Insurance Trust Fund and Disability Insurance Trust Fund. (b) Obligations exempt from public debt limit Obligations issued under subsection (a) shall not be taken into account in applying the limitation in section 3101(b) of title 31, United States Code, to the extent that such obligation would otherwise cause the limitation in section 3101(b) of title 31, United States Code, to be exceeded. (c) Report on certain actions (1) In general If the Secretary of the Treasury issues bonds under subsection (a), the Secretary shall thereafter submit a report each week, until all such bonds are redeemed, providing an accounting relating to— (A) the principal on mature obligations and interest that is due or accrued of the United States; and (B) any bonds issued pursuant to subsection (a). (2) Submission The report required by paragraph (1) shall be submitted to the Committee on Ways and Means of the House of Representatives and the Committee on Finance of the Senate. 4. Rescission of unobligated balances (a) Identification of unobligated balances Upon the issuance of a notification under section 2, the President may issue a message to Congress containing a list of budget authority proposed to be rescinded. Such list may only contain items related to unobligated balances of funds made available before the beginning of the fiscal year during which such notification is made. (b) Expedited consideration of rescissions A message issued pursuant to subsection (a) shall be deemed a special message for purposes of the expedited procedures described under section 1017 of the Congressional Budget and Impoundment Control Act of 1974 ( 2 U.S.C. 688 5. Sale of mortgage-related assets Upon the issuance of a notification to Congress under section 2, the President may order the sale of the following assets, with the proceeds from such sales deposited in the Treasury: (1) On-balance sheet non-performing mortgages of the Federal National Mortgage Association. (2) Other mortgages owned or held by the Federal National Mortgage Association. (3) Real estate owned properties of the Federal National Mortgage Association. (4) On-balance sheet non-performing mortgages of the Federal Home Loan Mortgage Corporation. (5) Other mortgages owned or held by the Federal Home Loan Mortgage Corporation. (6) Real estate owned properties of the Federal Home Loan Mortgage Corporation. (7) Mortgage-backed securities held by the Board of Governors of the Federal Reserve System or any Federal reserve bank.

Summary: Debt Ceiling Alternative Act This bill establishes requirements and authorities for notifying Congress, issuing bonds, proposing rescissions, and selling assets if the debt limit will be reached. The Department of the Treasury must notify Congress if it estimates that the U.S. debt will reach the statutory debt limit during a quarter. After Congress is notified, Treasury must issue bonds that (1) have an interest rate linked to the nominal gross domestic product of the United States, (2) may only be used to pay the principal and interest on obligations of the United States held by the public or the Social Security trust funds, and (3) are exempt from the debt limit. Once Congress is notified that the debt limit will be reached, the President may issue a message to Congress containing a list of budget authority proposed to be rescinded. The list may only contain items related to unobligated balances of funds made available before the beginning of the fiscal year during which such notification is provided. Congress must consider the message using specified expedited legislative procedures. If the debt limit notice has been provided to Congress, the President may also order the sale of specified mortgage-related assets owned or held by the Federal National Mortgage Association (Fannie Mae), the Federal Home Loan Mortgage Association (Freddie Mac), and the Federal Reserve. The proceeds from the sales must be deposited in the Treasury.