Mick Mulvaney, director of the White House’s Office of Management and Budget, said out loud on Wednesday what I suspected (okay, feared) back in March someone from the Trump administration would say. America is running headlong toward default.
This all went down at a House Budget Committee hearing. Surely an otherwise humdrum affair as dry as the towel section at Macy’s. But a question from Todd Rokita (R-Ind.), vice chairman of the Budget Committee, gave Mulvaney the opportunity to provide that much-needed element of OMG.
Rokita: Does the administration have a preferred legislative approach to the debt-limit issue? For example, a specific amount or a specific time period? Secondly, how soon do you think you need to act?
Mulvaney: Very briefly, the answer to your first question is no, we do not have a final stated policy yet. I can tell you that I met about an hour yesterday with [Treasury] Secretary [Steven] Mnuchin to discuss this exact topic. … Secondly, regarding the timing, my understanding is that the receipts, currently, are coming in a little bit slower than expected and you may soon hear from Mr. Mnuchin regarding a change in the date.
There’s so much in Mulvaney’s answer that I must walk you through line by line.
“The answer to your first question is no, we do not have a final stated policy yet.” The only responsible answer to this question would point out that the legal limit on federal borrowing absolutely must be raised. That doing so does not add to current spending but pays for what the government has already bought. And that not doing so would destroy the full faith and credit of the United States and the dollar’s standing as the reserve currency of the world.
We shouldn’t be surprised by Mulvaney’s inability to let those words flow from his lips. In announcing his opposition to Mulvaney’s appointment, Sen. Patrick Leahy (D-Vt.) expressed alarm that instead of reassuring him that he took the prospect of default seriously, “[Mulvaney] again stated that he did not believe that ‘breaching the debt ceiling will automatically or inevitably’ lead to ‘grave worldwide economic consequences.’ ”
“Perhaps his views will suddenly change when he transitions from Congress to the Executive branch,” Leahy remarked in his no-vote on Mulvaney. Yeah, not so much.
“I can tell you that I met about an hour yesterday with [Treasury] Secretary [Steven] Mnuchin to discuss this exact topic.” I don’t know what they discussed in that sit-down, but Mnuchin could not have been more direct in his testimony before the House Ways and Means Committee on Wednesday. “I urge you raise the debt limit before you leave for the summer,” he said. “It is absolutely critical that where we’ve spent money, that we keep the credit of the United States as the most critical issue.” Mnuchin has been consistent and clear on this point since his confirmation hearings in January.
“My understanding is that the receipts, currently, are coming in a little bit slower than expected and you may soon hear from Mr. Mnuchin regarding a change in the date.” So, remember back in March, after Mulvaney released that awful “skinny budget,” when I warned that Tax Day was the most important date on the fiscal calendar? That was because less money coming in from tax collections on April 18 would move up the dreaded date for when the government would not have enough cash on hand to meet all of its financial obligations.
The Bipartisan Policy Center estimated then that that “X date” could fall between October and November. Oct. 2 is especially critical because a big retirement payment is due on that date. That drop-dead date could move up if tax receipts remain anemic. That means Congress better move sooner rather than later to raise the debt ceiling and forestall a global financial disaster. If reaction to Trump’s “dead before arrival” budget proposal is any indicator, my money’s on later. Money that I should probably put under the mattress at the rate things are going.
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