Trump hits out at party chiefs for debt-ceiling 'mess'

Mr Donald Trump viewing a drone aircraft used to patrol the border at the US Customs and Border Protection facility in Yuma, Arizona, on Tuesday. The escalating tensions between the US President and Republican lawmakers are the clearest signs to date
Mr Donald Trump viewing a drone aircraft used to patrol the border at the US Customs and Border Protection facility in Yuma, Arizona, on Tuesday. The escalating tensions between the US President and Republican lawmakers are the clearest signs to date that their uncomfortable alliance has begun to fray.PHOTO: REUTERS

He says congressional leaders missed chance to win approval for an increase in debt ceiling

WASHINGTON • US President Donald Trump yesterday sought to pin blame on his party's congressional leaders for what he 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.

The Treasury Department, already using "extraordinary measures" to remain current on its obligations, has said the limit on the amount the federal government may borrow must be raised by Sept 29. The issue is one of the must-pass measures Congress will take up when it returns on Sept 5 from its August recess. Another is a spending Bill: Congress will have about 12 working days from when it returns from the break to approve spending measures to keep the government open.

On Tuesday, Mr Trump threatened to shut down the government if the Bill does not include funding to construct a wall along the US-Mexico border, one of his signature campaign promises.

Yesterday's tweets escalate a feud with fellow Republicans on Capitol Hill. Mr Trump's relationship with Mr McConnell has deteriorated in recent weeks, with the President blaming his party's senators for failing to pass health-care legislation this summer.

Then President Barack Obama and Congress agreed in 2015 to suspend the debt ceiling until March this year, 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 the Treasury Department could miss a payment if Congress doesn't raise the debt ceiling in time.

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$1.1 trillion) for the year ending Sept 30, a phenomenon that has been worsened because some firms and others are delaying payments in anticipation of big tax cuts.

But Treasury can borrow money only up to a limit set by Congress, and this limit is known as the debt ceiling. Failure 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 that 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 figure rises and falls 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.

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 next month to cut a deal.

WASHINGTON POST, REUTERS

A version of this article appeared in the print edition of The Straits Times on August 25, 2017, with the headline 'Trump hits out at party chiefs for debt-ceiling 'mess''. Print Edition | Subscribe