WASHINGTON — Treasury Secretary Steven Mnuchin informed congressional leaders Friday that the government could run out of money in early September, pleading with lawmakers to reach a deal to raise the government’s borrowing limit before their August recess or risk a potentially catastrophic default.
Mnuchin, in a letter to leadership, said that while “it is impossible to identify precisely” how long the Treasury’s resources can last, updated predictions indicated that “there is a scenario in which we run out of cash in early September, before Congress reconvenes.”
“As such,” Mnuchin wrote, “I request that Congress increase the debt ceiling before Congress leaves for summer recess.”
He and House Speaker Nancy Pelosi, D-Calif., have spoken by phone multiple times this week about federal spending caps and raising the debt ceiling to prevent governmentwide spending cuts.
“I am personally convinced that we should act on the caps and the debt ceiling,” Pelosi told reporters Thursday evening. “Prior to recess.”
Negotiations between lawmakers and administration officials on Capitol Hill have intensified, as the threat of what could be a disastrous fiscal crisis grows closer. There is little appetite for what could be a politically tense stand-alone vote to raise the debt ceiling, and lawmakers do not want to approve a stopgap spending bill that keeps the money flowing for a year but does not reflect Congress’ changing priorities.
But only a handful of working days remain for both chambers before the August break.
The fate of a deal largely rests with Pelosi, who will have to wrangle the moderate and liberal factions of her majority, and President Donald Trump, who has proved to be an unpredictable factor in spending negotiations.
The federal government has already run a $747 billion budget deficit for the 2019 fiscal year, which ends in September — a 23% increase from the year before. That is an unusually large increase given the strength of economic growth.
Total personal and corporate income tax levels are down slightly from the previous year, Treasury Department statistics show. Federal spending has risen — particularly for national defense and for health care programs — and so have the interest costs on the growing national debt. Those trends reflect Washington’s free-spending ways and the rising costs of an aging population as the baby boom generation draws Social Security and Medicare benefits.