Default Prevention Act

This bill exempts certain obligations of the federal government from the statutory debt limit and establishes requirements for paying and prioritizing obligations after the debt limit is reached.

If the debt limit is reached, the bill requires the Department of the Treasury to continue issuing debt and making payments necessary to (1) pay the principal and interest on debt held by the public, the Social Security trust funds, and the Medicare trust funds; and (2) pay Medicare benefits. The bill also exempts these obligations from the debt limit until the debt limit has been modified or suspended.

The bill also establishes requirements for prioritizing the remaining obligations after the debt limit has been reached. Specifically, Treasury may not

pay any remaining obligations unless it can still pay obligations of the Department of Defense and any obligations necessary to provide benefits under laws administered by the Department of Veterans Affairs;

Summary by the Congressional Research Service.