Treasury Secretary Steve Mnuchin warned lawmakers recently that the deadline to raise or suspend the federal debt limit may be sooner than previously thought. The change is due to lower-than-expected tax receipts in April, which is typically the best month of the year for the government’s balance sheet due to tax-filing deadlines.
The debt limit had been suspended since November 2015 but went back into effect on March 16 of this year at the level of $19.808 trillion. This level covered the amount of outstanding debt at the time of the limit’s reinstatement. The Treasury Department can use so-called “extraordinary measures” to temporarily avoid default (as it has during past debt limit impasses) but eventually the limit will need to be raised or suspended again.
Estimates from both the Congressional Budget Office and the Bipartisan Policy Center previously projected that lawmakers could wait until October or November before raising or suspending the debt limit. Mnuchin now advises lawmakers to act before the August recess, warning them that waiting until after that could risk the nation’s first-ever default on its obligations.
Mnuchin also cautioned lawmakers against attaching politically controversial policy riders that could preclude a debt limit increase from receiving the bipartisan support necessary to pass both chambers of Congress. Instead, he urged them to pass a “clean” debt limit increase as soon as possible.
Lawmakers should heed the Treasury secretary’s warning to avoid jeopardizing the creditworthiness of the United States. There are several opportunities in any given year to debate the nation’s fiscal policies going forward, but when it comes to bills we’ve already incurred, the only acceptable option is to pay them.