Mnuchin: Backup plan ready on debt
Says he still would like Congress to raise limit
WASHINGTON — The Trump administration has a backup plan to keep the government from defaulting on its financial obligations even if Congress misses an August deadline to raise the debt limit, Treasury Secretary Steven Mnuchin told a congressional panel Monday.
Mnuchin had previously set an August deadline for the government to avoid a catastrophic default. Mnuchin said he still prefers that Congress increase the government’s authority to borrow before lawmakers leave on a five-week break in August.
However, he said he is “comfortable” that the Treasury Department can meet the government’s financial obligations through the start of September. Private analysts say Mnuchin probably has even greater leeway.
“If for whatever reason Congress does not act before August we do have backup plans that we can fund the government,” Mnuchin said without elaborating. “So I want to make it clear that that is not the timeframe that would create a serious problem.”
The federal government technically hit the debt limit in March, but Treasury has been using accounting steps known as “extraordinary measures” to avoid a default.
Shortly before Mnuchin testified, a Washington think tank projected that the government will have enough cash to pay its bills until October or November.
The Bipartisan Policy Center says that revenue results from this month’s quarterly tax payments
could clarify the deadline, but for now it forecasts that Mnuchin has sufficient maneuvering room to keep the government solvent into the fall. The policy center says a big Oct. 2 payment into the military retirement trust fund could trigger default.
As of Friday, the Treasury had a cash balance of $148 billion, down from $204 billion a month ago. The national debt is nearly $20 trillion, including money owed to several federal programs.
Lawmakers are trying to deal with the debt limit while a House panel is beginning work on spending bills to fund the government.