Senate debt-ceiling talks end without progress

Deadline to raise limit is Sept. 29; vote on measure could come down to wire

The Senate and House have 12 joint working days before Sept. 29, when the Treasury Department says it would no longer be able to pay all of the government’s bills unless Congress acts. A default would likely set off a major disruption to the world financial system, with a stock market crash and surging interest rates that could send the economy into a recession.

Treasury Secretary Steven Mnuchin has urged Congress for months to raise the debt limit, but the White House has lacked a unified message and run into resistance on Capitol Hill, where Democrats and Republicans are at odds on key tax and spending issues.

Mnuchin met Tuesday morning with Senate Majority Leader Mitch McConnell, R-Ky., and Senate Minority Leader Charles Schumer, D-N.Y., searching for ways to raise the debt ceiling, but the gathering ended without any progress — or even a clear sense of what the lawmakers needed to deliver votes to raise the limit.

The White House had implored Congress to raise the debt ceiling before the August recess, but lawmakers showed little sign of engaging. The House of Representatives has left town and will not return until after Labor Day.

The U.S. government spends more money than it brings in through revenue, creating an annual deficit. The Treasury Department borrows money to cover that gap by issuing debt, and it has always paid back the bondholders on time. According to one measurement, the government now has close to $20 trillion of debt.

Congress has established a cap on the amount of money the government can borrow, and Mnuchin has told Congress that this cap must be raised by Sept. 29 to ensure he can continue paying all of the government’s bills.

Republicans often resist efforts to raise the debt ceiling, making GOP leaders rely on Democrats to help them get enough votes to pass the bill. But substantive talks on how to raise the debt ceiling have not begun, and the breakdown at the Mnuchin meeting on Tuesday suggests a vote on the measure could come down to the wire late next month.

Some Republicans, even some within the White House, have suggested there should be spending cuts that accompany any agreement to raise the debt ceiling.