Mnuchin Urges Congress to Lift Debt Ceiling Before August Recess -- 2nd Update
Treasury Secretary Steven Mnuchin said Monday that the U.S. government can be funded through "the beginning of September" and urged lawmakers to raise the federal borrowing limit before they leave for their summer recess.
He reiterated remarks he made last week that if Congress doesn't raise the federal borrowing limit before August, Treasury has "backup plans" to fund the government but didn't elaborate on what those plans entail.
"I want to make it clear that this is not the time frame that would create a serious problem," he said, but added, "Markets don't want us to wait. The sooner we do this, the better."
Asked for more specifics on when the government will run out of cash to pay its bills, Mr. Mnuchin said he would prefer not to give a range at this time.
Mixed messages and a dearth of details from the administration have led to confusion on Capitol Hill and in markets over when exactly Congress needs to lift the debt ceiling.
Government debt hit Congress's self-imposed limit at nearly $20 trillion in mid-March. Since then, Treasury has been using extraordinary measures, such as redeeming certain investments in federal pensions programs and suspending new investments in those programs, to raise cash. Eventually, Treasury could exhaust those measures and run too low on cash to make all of its payments in full and on time unless the debt limit is raised and it can once again sell bonds.
Mr. Mnuchin said failure to increase the debt ceiling would "obviously create significant market disruption."
"I can't imagine that we would get to a point where we don't raise it," he told a House panel.
He also emphasized his preference that Congress increase the debt limit without conditions such as spending cuts or changes to the congressional budget process, and said the debt ceiling should not be a partisan issue.
"It should be an acknowledgment that we have spent the money and need to fund the government," he said.
This is the first time the Treasury secretary has said when he expects the government to run out of cash to pay the government's bills.
Analysts had estimated that Treasury will run out of cash to meet its obligations some time in October or November, though Wells Fargo economists said Monday it could happen as early as the first week or two of September.
One uncertainty surrounding the forecasts is lower government revenues in recent months than previously expected. If the trend continues, it could cause Treasury to run out of room sooner, analysts have said.
Lawmakers leave for their summer recess on July 28 and don't return to Capitol Hill until September 5.
Mr. Mnuchin also suggested "at some point in the future" that Congress considers changing the timing of the debt-limit expiration so it matches the budgets process and "we don't have to deal with this in this format."
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(END) Dow Jones Newswires
June 12, 2017 18:52 ET (22:52 GMT)