Mnuchin is a beseecher. A commanding figure is needed on the scene. Where has the Trump administration been all this time? Getting clean debt-ceiling legislation requires a herculean effort, especially out of those congressional Republicans who believe sabotaging the government is good for the country. The greatest threat to raising the ceiling unconditionally is found within Trump’s own party.
.. And it looks even worse when the president’s director of the Office of Management and Budget, Mick Mulvaney, has acted as a public cheerleader for tying a debt-limit increase to fiscal reforms favored by hawks in the House Freedom Caucus, where Mulvaney once held forth. That Trump was so cavalier about his treasury secretary getting stabbed in the back by his OMB director only underscores the magnitude of the problem caused by his inattention. Fortunately, after getting the word from the White House that Mnuchin “speaks for the administration” on the debt ceiling, Mulvaney this week saluted, silenced his foghorn and executed an about-face. At least in public.
.. Yet we are once again, as a country, about to be subjected to another “Perils of Pauline” debt-ceiling cliffhanger in which the financial system is placed at the point of death to only, I hope, escape at the end. That is, if this president, who takes apparent maniacal delight in pulling wings off butterflies in the form of
- Attorney General Jeff Sessions,
- former chief of staff Reince Preibus and
- former press secretary Sean Spicer,
awakes to his obligation to protect the full faith and credit of the United States, and gets to work. We live in hope.
Next Up for GOP Congress: Raising the Debt Ceiling
Treasury Secretary Steven Mnuchin says federal borrowing limit must increase by Sept. 29, giving lawmakers little time after recess to act
It is going to be a tight squeeze. Treasury’s cash balance is expected to drop to near $25 billion in September—a precariously low level, especially in the event of some unforeseen shock, such as a severe natural disaster, global crisis or unexpected drop in revenue.
Strategic challenges hang over Mr. Mnuchin’s options. When President Barack Obama was in power, some Republicans challenged the White House to allow cash to run down and prioritize some payments, such as interest on debt, over others, such as discretionary spending. That idea could return.
.. Complicating matters, the debt limit isn’t the only fiscal fight lawmakers are bracing for when they return from the August recess.
The showdown will coincide with the end of the fiscal year on Sept. 30, and the prospect of a government shutdown if Congress fails to authorize new spending for 2018. That could make the debt limit increase more difficult to address, if lawmakers get bogged down in a fight over spending.
Mnuchin Says Treasury’s Effort to Conserve Cash Is Costing Taxpayers
Treasury secretary urges Congress to raise debt limit before August recess
Mr. Mnuchin repeated his previous remarks that the government can keep employing those measures and maintain enough cash to pay its bills “through September.” But he acknowledged those efforts come with a cost to taxpayers, which one senator estimated to be around $2.5 billion.
.. “Right now effectively, as opposed to borrowing in the market at lower rates, we’re borrowing and making our trust funds whole at slightly higher rates,” Mr. Mnuchin said. “There is a real cost to doing that.”
Business Steven Mnuchin, Trump’s treasury secretary, is hurtling toward his first fiasco
Shortly before he was sworn in as treasury secretary, Steven Mnuchin spoke with his predecessor to get some advice.
.. Pay attention to the debt problems in Puerto Rico, Treasury Secretary Jack Lew warned Mnuchin, and remember that China’s currency issues are more complex than the incoming president, Donald Trump, had suggested during the campaign
.. And in pointed remarks, Lew told Mnuchin to take the debt ceiling seriously — or face a potential financial crisis.
.. His struggles are casting doubt on whether the political neophyte, who made his name on Wall Street, has the stature in Washington to press through a vote on a measure that former treasury secretaries of both parties have said is critical to preserving the nation’s reputation for financial stability... Treasury officials have designed plans to prioritize payments to government bondholders so that if the government runs short on cash it could, in at least a technical sense, avoid defaulting on U.S. debt.
Such a scenario would be very difficult to manage because some bills would either be delayed or not paid — but it could be necessary to prevent an actual default. Still, prioritizing payments this way could lead to a spike in interest rates and a stock market crash, analysts have said.
- .. Beyond the tax code and the debt limit, Mnuchin’s portfolio includes
- blocking terrorist financing,
- easing regulations and
- conveying Trump’s nationalist economic policy at home and abroad.
.. Mnuchin’s push on the debt ceiling was undermined from the start within the White House by Mick Mulvaney, the director of the Office of Management and Budget. Mulvaney is a former Republican congressman and founding member of the House Freedom Caucus
.. Mulvaney publicly questioned Mnuchin’s call for a clean vote, saying that he would prefer spending cuts or other budget changes as part of any proposal to increase the debt ceiling. Some White House and Treasury officials were incensed to see Mulvaney break ranks
.. And even though Trump told lawmakers that Mnuchin was his point person on the debt limit, the White House still has not publicly come out in favor of a no-strings-attached vote.
.. Lawmakers and congressional aides who have met with Mnuchin describe an earnestness that they viewed as refreshing but also easily outmaneuvered by experienced political hands.
“He’s certainly in the minority in the administration,” said Rep. Mark Meadows (R-N.C.), chairman of the House Freedom Caucus. “The problem is, yes, you could get a clean debt-ceiling, but it would be 180 Democrats in the House with 40 or 50 Republicans, and that’s not a good way to start.”
Meadows said that he recently attended a meeting of eight of the most conservative Senate and House lawmakers about how to handle the debt ceiling and that not once did they consider the idea of backing Mnuchin’s proposal for a clean debt-ceiling increase.
.. One of Mnuchin’s challenges is that he still lacks the Washington alliances many Treasury chiefs enjoy.
.. “He has an unassuming manner, but he should not be underestimated,” Hubbard said.
.. In a way, they share the same pedigree. Both were born into wealth (Mnuchin drove a Porsche in college) and generated even more during their careers.
Trump’s background was in real estate and Mnuchin’s was in banking, but both had a hankering for entertainment and celebrity that drew them close. Even while on Trump’s campaign, Mnuchin remained an active Hollywood producer.
.. Mnuchin has made clear that a tax overhaul is a focus of the president, tied to a broader goal of growing the economy at a rate of 3 percent a year, compared with 1.6 percent last year.
Economists say that is unlikely in any sustainable way — and roundly agree that, if the debt limit isn’t increased, the economy will begin contracting, not expanding.