House Ways and Means Committee Chairman Richard Neal (D-Mass.) is demanding that Treasury Secretary Steven Mnuchin provide an update on the debt limit ahead of a March 1 deadline.
“The United State must continue to pay all of its bills on time and in full,” Neal wrote in a letter to the top Trump administration official on Tuesday.
Neal’s letter comes as the the current debt limit remains suspended until March 1, when it will automatically be reinstated at whatever the debt level is at the time. The real deadline for action, however, could be several months later.
Hitting the debt limit stops the government from being able to borrow to pay its bills. Such a default would lead to a financial crisis and likely a serious economic downturn.{mosads}
In recent years, the Treasury Department has resorted to using “extraordinary measures,” loopholes that allow it to borrow internally without technically increasing the debt. Those measures could last through the summer, giving a few extra months of negotiations.
Neal asked Mnuchin on Tuesday to elaborate on when Congress would need to act.
Sen. Lindsay Graham (R-S.C.) has suggested that the debt limit be included in talks to avert another partial government shutdown beginning Feb. 16.
The longest shutdown in U.S. history, which lasted five weeks, ended on Friday after President Trump agreed to fully reopen the government for three weeks without securing money for his proposed border wall.
Trump has threatened to allow another shutdown to take place next month, or declare a national emergency to sidestep Congress to build a border wall, unless lawmakers provide funding for his signature proposal.
The Congressional Budget Office (CBO) said Monday that the 35-day shutdown cost the economy $11 billion, but that $8 billion of it would be recovered. The lost economic activity amounted to a 0.02 percent reduction in overall GDP.
Neal raised concerns that Trump could use the debt limit as a bargaining chip for the wall.
“If the President chooses to engage in brinksmanship on the debt limit, as he did on the shutdown, the market reaction and the cost to our economy would likely be far larger than the 0.02 reduction in GDP that CBO attributed to the shutdown,” Neal said.
Neal also blamed the GOP tax cut law for increasing the debt. The CBO projected that the law would lop $1.9 trillion off of federal revenues over a decade, even as spending continued to grow.
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