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News Link • Government Debt & Financing

House passes 'Pay China First' Act

 House Resolution 807, The Full Faith and Credit Act, mandates rules to go into effect should Congress fail to raise the country’s borrowing limit and the debt ceiling is reached.

If signed into law, the bill would outline an order in which the US would be required to pay off its debts: first people on Social Security and holders of US bonds would be compensated, and then items like Medicare and military benefits would be dealt with.

Because the government would have to settle up its debt with bond holders first, foreign nations — particularly China — would be the first to receive payment in theory. Opponents of the bill has thus labeled HR 807 the “Pay China First Act,” a moniker that House Speaker John Boehner (R-Ohio) didn’t disagree with in an interview just days before it was passed.

Those who have loaned us money, like in any other proceeding, if you will, court proceeding, the bondholders usually get paid first. Same thing here," Boehner told Bloomberg TV host Peter Cook on Tuesday.

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