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The No Default Act would automatically prevent the United States from defaulting on its debts if Congress fails to raise the debt ceiling by temporarily suspending the debt limit and automatically cutting discretionary government spending. When a debt ceiling crisis begins, the Treasury Secretary would be allowed to continue issuing bonds to pay existing obligations while one percent of all discretionary spending across federal agencies would be permanently cut every 30 days until Congress passes a measure to raise or suspend the debt limit. Once Congress acts to address the debt ceiling, the debt limit would be increased by the amount of new borrowing that occurred during the crisis period, but only for obligations that were necessary to pay legally required commitments. The Director of the Office of Management and Budget would be required to report to Congress every 30 days on the spending cuts, and the Government Accountability Office would review these reports to ensure accuracy.

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