Mnuchin Says U.S. Can Cope If Debt Ceiling Not Raised by AugustBy and
Government has ‘backup plans’ if limit not lifted in time
Critical not to disrupt financial markets, Treasury chief says
The U.S. government has “backup plans” for funding itself if Congress doesn’t raise the debt limit before lawmakers leave for their August recess as hoped, Treasury Secretary Steven Mnuchin said.
“I don’t want to leave any doubt, we have plans, backup plans for funding the government,” Mnuchin told reporters Friday at a press conference in Ottawa with Canadian Finance Minister Bill Morneau. “We will be fine if they don’t do it beforehand, but I want to emphasize that the sooner they do it, the less uncertainty there is in the market,” he said.
While the government hit its borrowing limit in March, it’s been relying on special accounting maneuvers to keep spending under the current ceiling of nearly $20 trillion. Increasing the debt limit -- a responsibility of Congress -- has become increasingly fraught in recent years as lawmakers used the debate as a bargaining chip for spending controls.
Mnuchin acknowledged that tax revenue is coming in “somewhat” lower than expected as a result of anticipated tax cuts, though he added that he’s not concerned. He repeated on Friday that the administration aims to complete an overhaul of the tax code this year.
The Treasury Department has projected it will run out of money in the second half of the year. Receipts totaled $2.17 trillion in the eight months through May, about 3 percent lower than projections, the Congressional Budget Office said in monthly projections this week.
Asked to elaborate on the administration’s backup plans, Mnuchin joked that he would use his Treasury secretary “superpowers” to solve the issue, referring to special accounting measures to remain below the ceiling.
“The U.S. credit is the most important and the strongest in the world, and we will make sure we do everything to make sure we can continue on that,” he said.
— With assistance by Greg Quinn