Trump Seeks $7.85 Billion for Harvey, Action on Debt Limit

Updated on
  • White House suggests tying storm aid to borrowing authority
  • President is traveling in Texas, Louisiana to offer support

How Harvey Impacts the Debt Ceiling Debate in Washington

President Donald Trump visited storm-ravaged Texas Saturday saying he hopes for a “quick process” getting Congress to approve almost $8 billion in initial Hurricane Harvey relief despite concerns that some Republicans will balk at suggestions it be tied to lifting the federal debt ceiling.

"We’re signing a lot of documents now to get money into your state,” Trump told reporters at the emergency shelter in the NRG Center in Houston, where he stopped by a lunch line for people displaced by the massive flooding. “We signed it and now it’s going through a very quick process.”

In a letter to House Speaker Paul Ryan requesting the storm aid, Budget Director Mick Mulvaney on Friday stopped short of explicitly asking for the aid to be tied to raising the debt ceiling. But the letter makes clear that the emergency spending will accelerate the timetable for raising the limit and conveys the idea that failure to pay obligations could imperil essential government services.

The White House disaster aid request includes $7.4 billion for the Federal Emergency Management Agency and $450 million for the Small Business Administration. The request is intended primarily to cover funding demands through the end of the federal fiscal year on Sept. 30.

The administration’s move will test the willingness of Republicans in Congress to link the two must-pass pieces of legislation. House GOP leaders plan to vote next week on Trump’s request in initial disaster relief funding but they don’t plan to include a U.S. debt-limit increase in the legislation, two GOP congressional aides said before Mulvaney’s letter was sent.

“America is with you,” Trump tweeted Saturday morning, before departing Washington on a planned visit to Houston and, later, parts of Louisiana. It will be his second trip to areas devastated by the catastrophic storm, having visited the region Tuesday after pledging to secure funding for Harvey relief “very, very quickly.” Vice President Mike Pence made a stop of his own on Thursday to reinforce the administration’s commitment.

Accomplish Both

"The president visited Texas on August 29, 2017 to reassure the people of Texas that the Federal Government would help them rebuild from the catastrophic flooding and damage to affected communities," Mulvaney said in the letter. "This request is a down-payment on the President’s commitment to help affected States recover from the storm, and future requests will address longer-term rebuilding needs."

Administration officials and congressional leaders have been discussing the need to accomplish both in behind-the-scenes conversations, aides said, with the expectation that the Senate is more likely than the House to attach the two, but that House lawmakers may be willing to pass a Senate bill that does both.

Senate Majority Leader Mitch McConnell, a Republican from Kentucky, in a statement vowed cooperation, though he didn’t mention the debt limit.

"Working closely with the President and the House of Representatives, the Senate stands ready to act quickly to provide this much-needed assistance to those impacted communities, and support first responders and volunteers,” he said.

Ryan also was silent in his response about the debt ceiling. "As families & communities begin long recovery from Hurricane Harvey, House will act quickly on @POTUS request for emergency relief funding," he said on Twitter.

The president and his team are conscious of the optics on two fronts: not wanting to suggest they would put storm victims’ needs at risk to advance other legislation, and not wanting to be seen as telling Congress how to do its job, according to officials.

Bloomberg’s Jodi Schneider reports on President Trump’s potential plan to fund the disaster aid for Hurricane Harvey.

(Source: Bloomberg)

The efforts to link the two measures are intended to avoid a standoff over the issue that could rattle financial markets. Treasury Secretary Steven Mnuchin has repeatedly said that it’s “critical” that Congress raise the debt ceiling by Sept. 29.

Ryan told the Milwaukee Journal Sentinel, though, that Congress has until October to act on the debt limit.

“We will not default,” the Wisconsin newspaper quoted Ryan as saying. “We’ve got a lot of options on our plate. We’re going to assess those options. We have until October to figure that one out.”

House conservatives are opposed to raising the debt limit without obtaining concessions on federal spending. The Senate could still add an increase in legal borrowing authority when it considers the aid measure, but any change in the package would require a new vote in the House. A public plea from Trump also could alter the position of House leaders.

If the debt-limit increase isn’t included in the initial disaster funding, Congress might not act until the U.S. is on the verge of a default. The next chance to include increased borrowing authority in a broader measure would be when Congress considers a stopgap spending bill to keep the government open. 

Read more: Why U.S. Is Debating the Debt Ceiling All Over Again

The White House will ask Congress to provide FEMA with $6.7 billion in that legislation, and provide the full funding upfront, rather than pro-rating the appropriation out over the entire fiscal year, an administration official said. That request, if adopted by lawmakers in a vote likely to come at the end of the month, would provide FEMA with additional flexibility to fund Harvey relief efforts in the new fiscal year.

Market angst is growing as Congress has only a limited number of working days remaining to raise the debt ceiling. The spread between one- and three-month Treasury bills has shrunk to around 8 basis points from as high as 24 basis points in May as investors have started demanding higher rates on one-month paper relative to three-month securities to compensate for default risk.

The White House would like to extend the debt limit long enough to move back the threat of a default until after Congress can deal with both funding for the full federal fiscal year and tax legislation the Trump administration backs, one of the officials said.

Border Wall

Trump would like to decouple the debt limit from a potential fight in Congress over funding for a border wall that risks a government shutdown, one of the officials said. 

The White House has assured Republican congressional leaders that Trump won’t pick a border wall fight during the debate over a stopgap bill needed to keep the government open past Sept. 30, said two people familiar with the conversations. The president would prefer to avoid entangling the borrowing limit deliberations with a fight over the wall. That makes a confrontation more likely in December, when the stopgap bill is likely to run out.

The White House has responded to Hurricane Harvey with promises to put the full resources of the federal government behind the recovery. Rainfall from the storm has set a record for the continental U.S., according to the National Weather Service, and it’s expected to be among the most expensive natural disasters in American history.

100,000 Homes Damaged

More than 311,000 Texans had already applied for federal disaster relief funds as of Thursday morning and more than $530 million already has been granted, Pence said. About 100,000 homes were damaged by the storm, White House Homeland Security Adviser Tom Bossert said in a briefing.

As of Thursday at 9 a.m. New York time, the balance left in FEMA’s disaster relief fund was $2.1 billion, of which $641 million was immediately available for response and recovery efforts related to Hurricane Harvey, said Mark Peterson, a spokesman for the agency. The Senate acted later Thursday to free up an additional $500 million for Harvey relief.

Homes and vehicles stand in floodwaters in Spring, Texas, on Aug. 28.

Photographer: Luke Sharrett/Bloomberg

House conservatives are demanding spending cuts or cost-control measures be part of any debt-limit deal. 

“Why would we do a clean bill with a Republican president?” Representative Dave Brat of Virginia, a member of the conservative House Freedom Caucus, asked in an interview Wednesday. “We need some kind of fiscal reforms here.”

House Freedom Caucus Chairman Mark Meadows told the Washington Post on Thursday he would oppose combining the debt-limit increase with hurricane relief.

Texas Conservatives

Some conservative Republicans from Texas feel differently. Representative Blake Farenthold, whose Texas district was hit by the storm, said Friday he would accept a proposal to raise the debt ceiling along with Harvey aid.

“It may have to be attached to a debt-ceiling bill, because the amount of devastation here probably will push us much closer to the debt ceiling,” he said on CNN. “I’m not going to like it, but I think they can probably throw a debt ceiling in with it and I’d vote for it.”

Mnuchin warned that additional spending on Harvey recovery could shorten the window to avert a U.S. default. 

“In terms of when it’s going to hit the debt ceiling, there could be some impact of a couple of days, but that would be the most,” he said in an interview Thursday on CNBC.

— With assistance by Saleha Mohsin, Jennifer Jacobs, Boris Korby, Toluse Olorunnipa, Justin Sink, Steven T. Dennis, Anna Edgerton, Elizabeth Wasserman, and Kenneth Pringle

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