Why raising the debt ceiling is actually not a license to spend

As Congress weighs lifting or suspending the U.S.’s debt ceiling, Treasury Secretary Steven Mnuchin on Friday dismissed any possibility which the U.S. could default on its debt.

“We’ll be fine,” said Mnuchin at a joint press conference with Canadian Finance Minister Bill Morneau in Ottawa.

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“which is actually not an issue, yet I don’t want to leave any doubt which we have plans along with backup plans,” said the former Goldman Sachs banker following a one-day bilateral meeting between the U.S. along with Canada.

When asked what those backup plans could be, Mnuchin referred to them as “Treasury secretary super powers.”

A suspension of the debt ceiling expired in mid-March. Since then Treasury has had to use special accounting measures to preserve the country’s ability to borrow brand-new money without breaching the $19.8 trillion limit on accumulated debt.

Related: Congress can’t ignore the debt ceiling for long

While Mnuchin has yet to offer an estimate of when those special measures will be exhausted, the Congressional Budget Office along with the Bipartisan Policy Center have estimated which they likely could run out by mid-fall.

If Congress waits too long to either raise or suspend the debt ceiling again, Treasury will no long be able to pay all the country’s bills in full along with on time, which could send markets into turmoil.

Mnuchin has repeatedly urged lawmakers to act “sooner rather than later” to boost the nation’s borrowing limit before the Treasury Department runs out of emergency measures to avoid heading into default.

“We trust which which is actually addressed prior to August, yet we are comfortable which we have a pathway to make sure we don’t have issues,” said Mnuchin.

Lawmakers are likely to go home to their districts at the end of July along with won’t come back to Washington until after Labor Day.

Related: Mnuchin to Congress: Raise the debt ceiling

Last month, White House budget director Mick Mulvaney added urgency to the issue, suggesting Congress may need to raise the debt sooner than the administration had anticipated.

“My understanding is actually which the receipts currently are coming in a little bit slower than expected along with you may soon hear coming from Mnuchin regarding a change from the date,” Mulvaney said at a House hearing in May. Mnuchin has yet to offer any additional guidance.

On Friday, he acknowledged which such tax receipts were “somewhat lower” due to anticipation of a tax overhaul, yet did not express any immediate concern.

sy88pgw (brand-new York) First published June 9, 2017: 4:18 PM ET


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