Treasury Secretary Steve Mnuchin on Wednesday said that the debt ceiling will need to be lifted by “late Summer,” earlier than some analysts had predicted.
“I haven’t been given an exact date, but I would say it’s late summer, and I share your concern and I urge Congress to raise the debt ceiling as soon as possible,” Mnuchin said at a House Financial Services Committee hearing.
{mosads}The debt ceiling, which limits how much Treasury can borrow to pay off the government’s bills, was technically reached in March, but the Treasury Department has embarked on a series of “extraordinary measures” that allow it to borrow internally to keep paying bills.
If those measures run out before Congress passes and the president signs an increase to the limit, or suspends it altogether, the government would default on its bills, which could set off a global financial crisis.
Mnuchin testified that the economic impact of such an eventuality would be “significant.”
A study released earlier this month by the Bipartisan Policy Center estimated that the debt ceiling wouldn’t need to be lifted until October or even early November.
“Everybody understands this issue and I surely hope we never get to the point late summer where we’re even contemplating these things,” Mnuchin said.
The new timing projection could be one reason why the White House has become amenable to including the debt ceiling in recent negotiations over spending caps.
On Tuesday, Mnuchin participated in lengthy meetings with “the four corners,” Senate Majority Leader Mitch McConnell (R-Ky.), Senate Minority Leader Charles Schumer (D-N.Y.), Speaker Nancy Pelosi (D-Calif.) and House Minority Leader Kevin McCarthy (R-Calif.) on a deal to increase spending levels, which needs to be reached by the start of the new fiscal year on October 1 to avoid steep, automatic spending cuts.
Democrats familiar with the meetings said that the White House had originally hoped to delay striking a deal until closer to the deadline, anticipating that they could wring more concessions from Democrats. An earlier debt ceiling deadline could have interfered with that strategy.
—Sylvan Lane contributed.