WASHINGTON — Treasury Secretary Steven Mnuchin told congressional leaders that the debt ceiling should be raised before lawmakers leave for their August recess to avert the potential of an unprecedented default on the national debt.
In a letter to House and Senate leaders Friday, Mnuchin said that based on updated projections, “there is a scenario in which we run out of cash in early September, before Congress reconvenes.”
The notification comes one day after House Speaker Nancy Pelosi said she wanted an agreement this month with President Donald Trump on raising the borrowing limit and setting spending levels for the coming budget year.
Pelosi’s office said that she and Mnuchin talked again by telephone on Friday and that negotiations would continue over the weekend.
The Bipartisan Policy Center, a centrist research organization, projected this week that lower-than-expected federal revenues this year could leave the government without the cash it needs in early September.
“Weaker-than-expected corporate income tax collections, in particular, seem to be related to the 2017 tax cuts,” the BPC said in its report Monday.
Since early March, Mnuchin has been using a variety of emergency measures that other Treasury secretaries have also employed to avoid running out of the funds needed to keep the government operating and to cover interest payments on the $22 trillion national debt.
The debt limit had been suspended for a year under a 2018 budget deal, allowing the government to borrow as much money as it needed to keep operating.
But once the limit went back into effect in early March, the Treasury has had to tap government pension funds and employ other maneuvers to create room for more borrowing without hitting the $22 trillion limit.
The U.S. government has never missed a debt payment. A budget battle between President Barack Obama and congressional Republicans in 2011 pushed approval of a debt limit increase so close to a default that the Standard & Poor’s rating agency downgraded a portion of the country’s credit rating for the first time in history.
