As revenue slows, debt limit vote now sooner than expected
Mnuchin: Congress must act before its annual August recess
USA TODAY
House Speaker Paul Ryan acknowledged Thursday that Congress will have to speed up a vote for raising the debt limit because of warnings from the Trump administration that the government is now expected to run out of money to pay its bills in August rather than this fall.
“The debt ceiling issue will get resolved,” the Wisconsin Republican told reporters at his weekly news conference. “The timing is what I think is the newsworthy thing here. (Tax) receipts aren’t quite what people thought they were, and that’s why (Treasury) Secretary (Steven) Mnuchin is moving the timetable up. So we’re looking at that new timetable.”
The debt limit, also called the debt ceiling, is the legal amount that the U.S. Treasury can borrow to pay the government’s existing bills, including Social Security and Medicare benefits, military salaries, tax refunds, interest on the national debt, and other obligations. The limit is set by Congress.
However, Congress suspended the limit as part of a 2015 budget deal that expired March 16. Lawmakers need to vote to reset the limit to about $20 trillion to reflect the nation’s current debt.
Government officials had previously estimated that the “extraordinary measures” that Mnuchin has been using to keep raising cash to pay the government’s bills would not be exhausted until sometime this fall. But Mnuchin, testifying at congressional hearings Wednesday and Thursday, is now warning lawmakers that they must act before they go on their annual August recess.
White House Budget Director Mick Mulvaney said this week that tax receipts are coming in slower than expected, leaving the government short of funds to pay its debts unless Congress raises the limit.
“We’re talking with our members on this,” Ryan said. “Every Treasury secretary says this and every Treasury secretary needs to say this. And we’re going to be talking with our members and with the administration on how we’re going to resolve the debt ceiling.”
Ryan faces resistance from conservative members of his caucus, who don’t want to raise the debt limit unless that action is tied to spending cuts. Those cuts are likely to be opposed by Democrats and some moderate Republicans in both the House and Senate.
“The U.S. federal government is drowning in debt, yet continues to spend into oblivion on the backs of future taxpayers,” members of the conservative House Freedom Caucus said in a statement Wednesday.
Mnuchin has called for Congress to pass a “clean” debt limit increase that is free of any controversial riders. But the Freedom Caucus said “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 (the budget) in the near future.”
Congress has never failed to raise the debt limit before.
If Congress does not act this summer, the government won’t be able to pay back people who invested in U.S. Treasury bonds. That would cause the value of U.S. bonds to plummet.
The government also would have to pay a higher return to investors because bonds would no longer be considered safe. That could cause interest rates to go up throughout the world, causing what economists predict would be a global economic crisis.