Politics: Government Could Breach Debt Ceiling in September, Mnuchin Warns - - PressFrom - US

PoliticsGovernment Could Breach Debt Ceiling in September, Mnuchin Warns

22:42  12 july  2019
22:42  12 july  2019 Source:   nytimes.com

Mnuchin says debt ceiling deal 'close'

Mnuchin says debt ceiling deal 'close' Treasury Secretary Steven Mnuchin on Monday expressed optimism that Congress will agree to a deal that includes raising the debt ceiling in the coming weeks. Mnuchin addressed reporters from the White House briefing room, where he said he's had "productive talks" with Speaker Nancy Pelosi (D-Calif.), and that Democrats, Republicans and the White House are all in agreement that packaging a budget deal and a deb ceiling increase "is the first choice." "I think we're very close to a deal. But as you know these deals are complicated," Mnuchin said.

Government Could Breach Debt Ceiling in September, Mnuchin Warns© Anna Moneymaker/The New York Times Treasury Secretary Steven Mnuchin said that the government could run out of money in early September.

WASHINGTON — Treasury Secretary Steven Mnuchin informed congressional leaders on Friday that the government could run out of money in early September, pleading with lawmakers to reach a deal to raise the government’s borrowing limit before their August recess or risk a potentially catastrophic default.

Mr. Mnuchin, in a letter to leadership, said that while “it is impossible to identify precisely” how long the Treasury’s resources can last, updated predictions indicated that “there is a scenario in which we run out of cash in early September, before Congress reconvenes.”

Trump says will not use U.S. debt ceiling to negotiate spending deal with Congress

Trump says will not use U.S. debt ceiling to negotiate spending deal with Congress Trump says will not use U.S. debt ceiling to negotiate spending deal with Congress

“As such,” Mr. Mnuchin wrote, “I request that Congress increase the debt ceiling before Congress leaves for summer recess.”

[Read the Mnuchin letter here.]

He and Speaker Nancy Pelosi of California have spoken by phone multiple times this week, including two conversations Thursday evening, about raising the debt ceiling and preventing a round of governmentwide spending cuts from sweeping across all federal agencies next year.

“I am personally convinced that we should act on the caps and the debt ceiling,” Ms. Pelosi told reporters Thursday evening, in between phone calls with the secretary. “Prior to recess.”

Negotiations between lawmakers and administration officials on Capitol Hill have recently intensified, as the threat of what could be an disastrous fiscal crisis grows closer.

U.S. May Top Debt Limit Sooner Than Forecast, Forcing Congress’s Hand

U.S. May Top Debt Limit Sooner Than Forecast, Forcing Congress’s Hand Congress has been acting like it has months to raise the U.S. debt limit, but lower tax revenue projections mean lawmakers could face a tighter deadline, according to an independent policy group. The Bipartisan Policy Center said Monday there is a “significant risk” that the U.S. will breach its debt limit in early September unless Congress acts. The group’s evaluation marked a revision from its previous forecast of an October to November date at which the U.S. will default on payment obligations. The Treasury Department has been using so-called extraordinary measures to meet debt obligations since March 2, when the U.S.

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The federal government has already run a $747 billion budget deficit for the 2019 fiscal year, which ends in September — a 23 percent increase from the year before. That’s an unusually large increase given the strength of economic growth.

Total personal and corporate income tax levels are down slightly from the previous year, Treasury Department statistics show. Federal spending has risen — particularly for national defense and for health care programs — and so have the interest costs on the growing national debt. Those trends reflect Washington’s free-spending ways and the rising costs of an aging population as the Baby Boom generation draws Social Security and Medicare benefits.

Those dynamics have yet to spark a renewed interest in the deficit, but they are intensifying pressure on lawmakers to raise the debt limit, or risk economic catastrophe if they do not.

Pelosi rejects short-term debt ceiling hike as budget talks extend

Pelosi rejects short-term debt ceiling hike as budget talks extend Her move comes as she continues talks on a broader budget deal with Treasury Secretary Steven Mnuchin. require(["medianetNativeAdOnArticle"], function (medianetNativeAdOnArticle) { medianetNativeAdOnArticle.getMedianetNativeAds(true); }); After days of hashing out their positions over the phone, Pelosi (D-Calif.) and Mnuchin spoke again Monday night, with plans to talk on Tuesday, according to a Pelosi aide.

A 2018 budget deal in Congress suspended the limit, which constrains the amount of money the government may borrow to continue paying its bills, until March 1 of this year. Once that deadline passed, the Treasury Department was forced to begin employing “extraordinary measures” in order to maintain the borrowing needed to keep paying soldiers, issuing Social Security checks and otherwise funding the government.

Those measures include premature redemption of Treasury bonds owned by federal employees’ retirement accounts, borrowing cash set aside to smooth exchange rate fluctuations and stopping contributions to some government pension funds.

Mr. Mnuchin’s letter is a warning that those sleight-of-the-balance-sheet efforts cannot last forever. When Treasury runs out of them, it will not have enough money coming in to pay its spending obligations. That would necessitate either sharp and immediate spending cuts, or a government default on some of its obligations — not paying workers, contractors, lenders or citizens it owes money to, basically.

High anxiety hits Senate over raising debt ceiling

High anxiety hits Senate over raising debt ceiling Senators are growing anxious that they might have to vote to raise the nation's debt ceiling in a matter of weeks.

Economists generally warn that such a default would at minimum destabilize the economy and raise future government borrowing costs. In a worst case, it could shock the economy into recession.

But efforts to raise the borrowing limit have been tied up with broader budget negotiations. Lawmakers in both parties want to set higher spending caps for military and domestic spending for the coming fiscal year, which begins in October. If no agreement can be reached, statutory, across-the-board spending cuts will slice through the government Jan. 1, as the strict, austere spending limits set by the Budget Control Act of 2011 come back into force.

Democrats have insisted that domestic spending increases equal the military spending increases demanded by President Trump. But some Republicans, led by the acting White House chief of staff, Mick Mulvaney, are resisting that demand.

That dynamic has kept budget talks in a stalemate for weeks.

Read More

Debt Limit Deal Hinges on Pelosi Review of Spending Cut Options.
The White House late Thursday sent House Speaker Nancy Pelosi a proposed list of spending cuts to give her options for a budget agreement that she wants to include in a deal to raise the debt ceiling, according to two people familiar with the proposal. require(["medianetNativeAdOnArticle"], function (medianetNativeAdOnArticle) { medianetNativeAdOnArticle.getMedianetNativeAds(true); }); The Trump administration is giving Democrats a menu of savings equaling at least $574 billion to offset the costs of a two-year budget cap agreement.

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