A Debt-Limit Crisis Could Arrive Sooner Rather Than Later

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Treasury Secretary Mnuchin told Congress that we need a “clean” debt-limit bill this summer. But that’s easier said than done. Photo: Drew Angerer/Getty Images

There are four high-priority items on the congressional GOP’s increasingly cramped schedule for 2017: health care, tax cuts, appropriations for the next fiscal year, and an increase in the debt limit. The more they get crowded into the same tiny space on the calendar, the greater the odds they become interrelated in potentially dangerous ways.

Speaking of danger, the must-pass item that really has to happen is the debt-limit increase, without which the federal government will begin to default on its obligations and then, more likely than not, we’ll see an economic collapse.

The original schedule assumed that the Treasury would be able to juggle this and that, and use this or that accounting gimmick to put off the fateful day for a debt-limit increase until some time in the fall. But today, Treasury Secretary Mnuchin told the House Ways and Means Committee that they’d better move the date up (in separate congressional testimony, budget director Mick Mulvaney said it was because “receipts currently are coming a little bit slower than expected”) ahead of Congress’s long August recess.

Even more interestingly, Mnuchin endorsed the long-standing Democratic position favoring a “clean” debt-limit increase:

Mnuchin also urged the House Ways and Means Committee to pass the debt limit legislation as a bill without controversial additions, such as spending cuts sought by conservatives, that could complicate its approval.
“We can all discuss how we cut spending in the future and how we deal with the budget going forward but it is absolutely critical … that we keep the credit of the United States as the most critical issue,” Mnuchin said.

That is not going to go over well with many conservatives. They may decide simply to whine about it all as a coalition of Democrats and RINOs vote a “clean” debt increase onto Donald Trump’s desk. But it’s dollars to doughnuts they find something to hold hostage to keep that from happening. And it could very well be one of the other “must-pass” bills.

In addition, for all we know, the debit-limit increase could arise in close proximity to final action on a health-care bill as well — again, a must-pass measure where conservatives will have massive leverage because there will be no votes to spare.

Perhaps the administration and GOP congressional leaders can successfully navigate around all these land mines, and we will see no threat of a debt default this year. But they haven’t exactly looked like legislative wizards so far in 2017. So we should all be afraid until the debt limit has been successfully raised.

A Debt-Limit Crisis Could Arrive Sooner Rather Than Later