He still thinks Democrats and Republicans will strike a deal
“We’ve spent the money. So the concept of the debt limit is somewhat of a ridiculous concept. This is a payment limitation,” United States Secretary of the Treasury Steven Mnuchin said last week in an interview with Axios co-founder Mike Allen. The statement prompted many to be concerned that a debt ceiling deal would not be reached, leading the U.S. government to default on its debts. It’s likely, however, this won’t happen, according to Mr. Mnuchin.
The currently $19.81 trillion debt limit represents a cap on how much outstanding public debt the United States may have at anytime. Such debts include federal contractor payments, interest to bondholders and benefits and refund checks to individuals. The debt limit enables the Treasury to pay what the U.S. already owes.
The debt limit and the government must lift the ceiling by about October to raise the limit so as to not default. Generally, the debt ceiling gets lifted by between $1 trillion to $2 trillion. The difficulty over the American Health Care Act, however, has made people wonder how smoothly debates over the debt limit might go.
Extending the debt ceiling isn’t what Trump says he would have done in the past. “I cannot believe the Republicans are extending the debt ceiling — I am a Republican & I am embarrassed!” he tweeted in 2013.
”I respectfully urge Congress to protect the full faith and credit of the United States by acting to increase the statutory debt limit as soon as possible,” Mnuchin wrote.
Democratic Party members say they will only pass a bill without austerity and controversy. “They have the obligation as the majority to pass this debt ceiling increase,” said Rep. Joseph Crowley (D-N.Y.), a member of the House Democratic leadership. “And if they cannot do it with their votes and they want our support, they need to talk to us about that.”
Republican Senator Rob Portman recently introduced a bill to usher in a reduction in spending for every dollar the debt limit was raised over a period of ten years. That means $90 billion in spending would be reduced in the first year assuming 2.2% trillion; that is, staunch austerity. President Trump’s proposals, which themselves have been called too austere, would not come close to achieving such spending cuts.
Despite the Republican Party’s conservative faction can make raising the debt limit difficult, Mnuchin doesn’t see it being a issue this year. Mnuchin wants something done, and the earlier the better.
“I’m hopeful this is something Congress addresses before the [summer] break,” he said. “Everybody understands we need to raise the debt limit … and that the full faith and credit of the United States is the most important thing.”