Duck! Treasury will hit the debt limit soon unless Congress votes to raise it
As Congress deals with battles over health care legislation and the budget this summer, it is looking more and more likely that a fight over raising the country’s debt ceiling will be added to its agenda.
The debt ceiling is a cap on how much the U.S. Treasury can borrow to pay for government expenses, and it can only be altered by an act of Congress. Lawmakers had been hoping they could put off dealing with it until the fall.
But key figures within the Trump administration are asking Congress to take action as soon as next month, saying that tax revenue has been less than expected. The Treasury Department’s power to actually borrow money ran out in March, and it has been operating since then with its cash on hand.
“We need to make sure we raise our debt ceiling to pay our debts,” Treasury Secretary Steven Mnuchin told a House subcommittee last week.
“My understanding is that the receipts currently are coming in a little bit slower than expected, and you may soon hear from [Mnuchin] regarding a change in the date,” Mick Mulvaney, director of the Office of Management and Budget, told a separate House panel.
Republicans have acknowledged the need to raise the debt ceiling but are hesitant to commit to a vote before they recess in late July.
“We have to do it. We can’t let the government default,” Sen. Orrin Hatch, R-Utah, told Politico.
A vote on the debt limit could be another headache for Republican leadership, however, as it comes in addition to other hotly contested policy debates. House Speaker Paul Ryan, R-Wis., and Senate Majority Leader Mitch McConnell, R-Ky., will have to reconcile vastly different views on the topic within their caucuses.
This is because the most conservative members of the House, known as the Freedom Caucus, have already signaled that they will demand spending cuts as part of any bill to raise the debt ceiling. Other Republicans, as well as most Democrats, want what is called a “clean” increase with no strings attached.
“We oppose any clean raising of the debt ceiling, we call for the debt ceiling to be addressed by Congress prior to the August Recess, and we demand that any increase of the debt ceiling be paired with policy that addresses Washington’s unsustainable spending by cutting where necessary, capping where able, and working to balance in the near future,” the caucus wrote in an official statement.
Widespread opposition from the most conservative members of the caucus could force Ryan and McConnell to seek Democratic help in pushing a bill to passage. Some measure of bipartisan support will already be required to clear the 60-vote threshold to squelch a filibuster in the Senate, since Republicans have only 52 members in that house.
While Democrats in both the Senate and House routinely voted to raise the borrowing limit under President Barack Obama, some members are indicating that they will look to use their leverage to get policy concessions from across the aisle.
“We should consider what additional conditions we might want to consider imposing,” Sen. Richard Blumenthal, D-Conn., told Politico.
Other Democrats are willing to pass a clean increase.
“The Republican majority should pass a clean debt limit increase and not risk the full faith and credit of the United States,” House Minority Leader Nancy Pelosi, D-Calif., said in a statement.
This will not be the first tussle over the debt ceiling. In 2011, Republicans brought the nation to the brink of default after insisting that any increase in borrowing be coupled with major spending cuts. Negotiations on the issue lasted for more than six months before Obama and congressional Republicans reached a deal in August.
The deadlock resulted in the first-ever credit downgrade for the U.S. government. The Dow Jones Industrial Average fell nearly 2,000 points over the course of the summer, in part because of the uncertainty that was created.
An increase in the debt ceiling in 2013 was comparatively uncontroversial.
If the debt ceiling is not raised, the Treasury Department can undertake what are known as “extraordinary measures,” such as suspending the sale of Treasury securities, to avoid a government shutdown. Once those are exhausted, the government would be unable to meet its obligations and could default, with consequences impossible to predict.
Read more from Yahoo News:
