Capitol Hill feud escalates as Trump blames McConnell, Ryan for upcoming 'mess' on debt ceiling

US President Donald Trump meets with Senate Majority Leader Mitch McConnell (left) and Speaker of the House Paul Ryan (right) during a meeting with Republican Congressional leaders at the White House in Washington, on June 6, 2017.
US President Donald Trump meets with Senate Majority Leader Mitch McConnell (left) and Speaker of the House Paul Ryan (right) during a meeting with Republican Congressional leaders at the White House in Washington, on June 6, 2017.PHOTO: REUTERS

WASHINGTON POST - President Donald Trump on Thursday (Aug 24) sought to pin blame on his party's congressional leaders for what the President predicts will be "a mess" to raise the federal government's debt limit.

In a pair of morning tweets, Mr Trump said he asked Senate Majority Leader Mitch McConnell and House Speaker Paul Ryan to include a debt-ceiling increase in a recent veterans Bill.

Mr Trump tweeted: "I requested that Mitch M & Paul R tie the Debt Ceiling legislation into the popular V.A. Bill (which just passed) for easy approval. They . . . didn't do it so now we have a big deal with Dems holding them up (as usual) on Debt Ceiling approval. Could have been so easy - now a mess!"

The Trump administration has warned that Congress must raise the debt limit before the end of September to avert a fiscal crisis. Next month could produce legislative brinkmanship because the debt impasse coincides with the deadline to pass a new government spending Bill.

On Tuesday, Mr Trump threatened to shut down the government if the Bill does not include funding to construct a wall at the United States-Mexico border, one of the President's signature campaign promises.

Mr Trump's Thursday tweets escalate a feud with fellow Republicans on Capitol Hill.

Mr Trump's relationship with Mr McConnell in particular has deteriorated in recent weeks, with the President blaming his party's senators for failing to pass healthcare legislation this summer.

Former US president Barack Obama and Congress had agreed in 2015 to suspend the debt ceiling until March 2017, and the Treasury Department has used emergency measures to delay a default.

Treasury Secretary Steven Mnuchin has said he will run out of options on Sept 29, meaning that the Treasury Department could miss a payment if Congress does not raise the debt ceiling in time.

Mr Mnuchin on Monday appeared in Kentucky with Mr McConnell, and they both assured voters that the debt ceiling would be raised. But neither of them said how they would pull it off.

The government spends more money than it brings in through revenue, and it borrows money to cover the difference by issuing debt.

The gap between revenue and spending - known as the deficit - is expected to be more than US$800 billion (S$1.09 trillion) for the year that ends Sept 30, a phenomenon that has been worsened because some companies and others are delaying payments in anticipation of big tax cuts.

But Treasury can only borrow money up to a limit set by Congress, and this limit is known as the debt ceiling. Failing to raise the debt ceiling could force the government to fall behind or delay some of its payments, an action that could lead to a spike in interest rates, a stock market crash, and a global recession, economists have predicted.

One reason Treasury officials are worried about the late September deadline is because they have a payment scheduled for military pensions that would exceed US$70 billion.

As of late last week, Treasury had only US$84 billion in its cash reserves. That figures rise and fall based on daily tax collection and spending requirements, but it has drawn down steadily for months.

When Mr Trump was sworn into office, Treasury had more than US$350 billion in cash reserves.

Traditionally, top political figures are coached to project calm about the debt ceiling for fear of spooking investors.

Mr Trump's alarmist warning on Thursday could lead to a new concern because Mr Mnuchin has tried to alleviate fears. Neither Mr Mnuchin nor Mr Trump has had to deal with the debt ceiling before, and Mr Trump - before he was sworn in as president - ridiculed Republicans for raising the debt ceiling.

The Trump administration has struggled to deal with the debt ceiling issue for months.

Mr Mnuchin has long called for a "clean" debt ceiling increase, which means he wants Congress to pass it with no strings attached.

But White House Office of Management and budget director Mick Mulvaney said an increase in the debt ceiling should be tied to spending or other budget cuts, an assertion that emboldened House conservatives to drive a hard bargain in negotiations.

Mr Mulvaney eventually backed off his position, but for many on Capitol Hill it was too late. They saw a divided White House with little leverage or focus on the issue, and time running short.

Republicans typically resist raising the debt ceiling, and GOP leaders were expecting to rely on Democrats to supply the votes to avoid a financial panic.

But Republicans have not seriously opened negotiations with Democrats on the measure and they do not have much time in September to cut a deal.