Mnuchin Says Treasury Could Run Out of Cash in Early September

Treasury Secretary Steven Mnuchin said the government could run out of cash in early September, before Congress returns from its August recess, and urged lawmakers to raise the federal borrowing limit before they leave town at the end of the month.

In a letter to House Speaker Nancy Pelosi (D., Calif.) Friday, Mr. Mnuchin said it is impossible to identify precisely when the Treasury will exhaust its “extraordinary measures,” which it has been using to keep paying the government’s bills on time since March 2, when the debt ceiling was reinstated after a prior suspension.

“Based upon projections, there is a scenario in which we run out of cash in early September, before Congress reconvenes,” Mr. Mnuchin said. “As such, I request that Congress increase the debt ceiling before Congress leaves for summer recess.”

Mrs. Pelosi told reporters after speaking with Mr. Mnuchin on Thursday evening that she hoped to reach an agreement to raise the debt ceiling and set new spending levels before the House leaves Washington for the August break on July 26.

“I am personally convinced that we should act on the caps and the debt ceiling,” she said. “Prior to recess.”

The two were expected to speak again on Friday, according to an aide for Mrs. Pelosi.

The Treasury has been warning lawmakers since May that it may exhaust its ability to pay its bills in late summer. A new estimate released Monday by the Bipartisan Policy Center suggested the government could hit the X-datein the first half of September, raising pressure on lawmakers to suspend or raise the federal debt ceiling sooner than they had expected.

If the government can’t borrow more money, the U.S. could be unable to meet all of its obligations, including salaries, benefits and potentially, interest payments on federal debt. Such a default would have unknown financial and economic consequences, and lawmakers have walked right up to the deadline in the past but avoided breaching it.

The earlier debt-limit deadline has thrown a wrench in negotiations over where to set federal spending levels next year. Lawmakers have been assuming that a spending deal for the fiscal year beginning Oct. 1 would include a debt-limit increase.

Mrs. Pelosi has maintained that any debt-ceiling vote should be paired with a new budget deal to lift federal spending caps enacted in 2011. The current budget agreement is also set to expire Oct. 1.

President Trump met Thursday in the Oval Office with chief of staff Mick Mulvaney, acting budget chief Russ Vought and legislative affairs chief Eric Ueland to discuss the negotiations, said a person familiar with the White House efforts.

The White House has asked federal agencies to provide updated shutdown contingency plans by early next month, the person said, describing that request as standard practice.

Exactly when the government will hit the debt limit depends on the pace of revenue collection and spending over the next two months, which can be difficult to project.

Corporate tax revenue had been particularly weak through much of the fiscal year but bounced back in June, a month with significant estimated tax payments, the Treasury said Thursday. Overall, revenue collection increased 3% so far this fiscal year, while outlays have risen 7%, amid higher spending on the military and interest payments on the debt.

White House Proposes $4.7 Trillion Budget for Fiscal 2020

Trump’s outline would sharply cut spending on safety-net programs

The Trump administration proposed a $4.7 trillion budget that would sharply reduce spending on safety-net programs, while effectively exempting the Pentagon from strict spending caps set to take effect in fiscal year 2020.

The president’s plan would widen the federal budget deficit to $1.1 trillion in the next fiscal year, which begins Oct. 1, and would propose to eliminate the deficit by 2034, in part by assuming the economy grows much faster than many independent forecasters expect.

The (probably) last major act of an anti-spending Congress: A $1.3 trillion budget-busting bill

The more than 2,200-page spending bill — and signed by President Trump — gave the Pentagon its biggest spending increase in 15 years, a top GOP priority. But it also included full funding for the Corporation for Public Broadcasting, despite Trump’s initial proposal to cut its funding from $465 million to $15 million.

.. More than 60 percent of Republicans in the House and the Senate voted for the legislation, a sign that the GOP might be returning to its big-spending ways of early last decade.

Back then, amid a major ramp-up in defense spending at the beginning of the wars in Iraq and Afghanistan, Republicans accepted big increases in domestic spending as well and created a new entitlement within Medicare. GOP leaders at the time exploded the earmark system, allowing even the lowliest rank-and-file lawmakers to direct millions of dollars to pet projects in their districts. Republicans believed the big spending helped shore up their incumbents’ standing back home.

.. Now, the Republican-led decision to bust those caps for the next two years raises the specter that the tough talk on deficits applied only when Democrats held the White House.

“Had the 2016 election gone a different way and we had a Democratic president, and we controlled the House and Senate, I can’t imagine us being in a situation where we would vote tonight or tomorrow for a bill that’s going to add $2 trillion in debt,” Corker said.

John Bolton Is Right About the U.N.

The U.N. is a never-ending scandal disguised as an everlasting hope. The hope is that dialogue can overcome distrust and collective security can be made to work in the interests of humanity. Reality says otherwise. Trust is established by deeds, not words. Collective security is a recipe for international paralysis or worse. Just ask the people of Aleppo.

.. Contrary to the belief that the U.N. runs on a shoestring, total expenditure for the U.N. system in 2016 was around $49 billion. That’s up 22 percent since 2010. And the abuse of the U.N. system by states such as Russia to protect clients like Bashar al-Assad is a feature of the system, not a bug.

.. “If you locked a team of evil geniuses in a laboratory, they could not design a bureaucracy so maddeningly complex, requiring so much effort but in the end incapable of delivering the intended result. The system is a black hole into which disappear countless tax dollars and human aspirations, never to be seen again.”

.. The U.N. adopted what were supposed to be landmark reforms more than decade ago. Yet the mismanagement, corruption, abuses and moral perversities remain.

  • Iran sits on the executive board of the Commission on the Status of Women. The
  • Syrian regime is represented on the U.N.’s Special Committee on Decolonization, dedicated to “respect for self-determination of all peoples.” In October, Zimbabwe’s
  • Robert Mugabe was named a good-will ambassador by the World Health Organization, until an outcry forced the director general to think better of it.

.. “Imagine if the U.N. was going to the United States and raping children and bringing cholera,” Mario Joseph, a Haitian lawyer seeking compensation for the U.N.’s victims, told The A.P., “Human rights aren’t just for rich white people.”

Budgets, Bad Faith and ‘Balance’

Over the past couple of months Republicans have passed or proposed three big budget initiatives.

  1. First, they enacted a springtime-for-plutocrats tax cut that will shower huge benefits on the wealthy while offering a few crumbs for ordinary families — crumbs that will be snatched away after a few years, so that it ends up becoming a middle-class tax hike.
  2. Then they signed on to a what-me-worry budget deal that will blow up the budget deficit to levels never before seen except during wars or severe recessions.
  3. Finally, the Trump administration released a surpassingly vicious budget proposal that would punish not just the vulnerable but also most working families.

.. Washington is full of professional centrists, whose public personas are built around a carefully cultivated image of standing above the partisan fray, which means that they can’t admit that while there are dishonest politicians everywhere, one party basically lies about everything.

News organizations are intimidated by accusations of liberal bias, which means that they try desperately to show “balance” by blaming both parties equally for all problems.

The Deficit Problem in a Chart

The most important thing to understand about the U.S. budget, Donald Trump or no, is illustrated by the nearby chart. Even with Mr. Trump’s modest increases, defense barely rises as a share of federal outlays. In 1989 when the Berlin Wall fell, defense was 26.5% of outlays. In 2019 it will be 15.6%.

Meantime, look at “payments for individuals,” which encompass such income transfers as Medicare, Medicaid, Social Security and food stamps, among other things. This category was 47.7% of outlays in 1989 and has steadily climbed to reach an estimated 69.2% in 2019.

.. Net interest on the federal debt soaks up another 7.4% of outlays for 2018, and that will rise with interest rates.

How Big a Bang for Trump’s Buck? (Wonkish)

I’m having a hard time figuring out exactly how big a stimulus we’re looking at, but it seems to be around 2 percent of GDP for fiscal 2019. With a multiplier of 0.5, that would add 1 percent to growth.

That said, I’d suggest that this is a bit high. For one thing, it’s not clear how much impact corporate tax cuts, which are the biggest item, will really have on spending. Meanwhile, unemployment is only 4 percent; given Okun’s Law, the usual relationship between growth and changes in unemployment, an extra 1 percent growth would bring unemployment down to 3.5%, which is really low by historical standards, so that the Fed would probably lean especially hard against this stimulus.