“There is zero chance — no chance — we will not raise the debt ceiling,” McConnell responded.
The federal government spends more money than it brings in through revenue, and it issues debt to cover the gap. The United States already has close to $20 trillion in debt, and it can borrow money only up to a certain level set by Congress. Mnuchin has said he will be able to pay all of the government’s bills only through Sept. 29, and he wants the debt ceiling increased so that he can continue making payments.
Some Republicans have said debt ceiling increases should be linked to spending cuts, a position Mnuchin has advised against. McConnell will need support from Democrats to pass any increase in the debt ceiling, and so far Democrats have not stipulated what kind of bill they would support.
If Congress fails to act on the measure, it could mean that the government defaults on its obligations, leading to an increase in interest rates, a stock market crash and a possible recession, economists have predicted.
The treasury secretary said that raising the debt ceiling would ensure “we can maintain the best credit.”
Mnuchin urged Congress to pass a “clean” increase in the debt limit — a bill that simply increases the ceiling and has no other policy changes or budget cuts attached to it. Many Republicans have signaled they would not support such a measure, and McConnell and House Speaker Paul D. Ryan (R-Wis.) have not backed any specific bill.
One option would be for GOP leaders to try to attach an increase in the debt ceiling to a popular bill that is sure to pass Congress, but that scenario also poses risks because lawmakers could still try to change the bill or threaten to block it if they want to force concessions.
The Treasury Department has been drawing down its cash reserves for months to delay the difficult vote on the debt ceiling. Treasury had more than $350 billion in its cash reserves account when President Trump took office in January. Last week, this cash reserves account had just $82 billion remaining.
Mnuchin also offered assurances Monday that the debt ceiling would be raised in time, although he didn’t map out how congressional leaders would muster the votes.
“We’re going to get the debt ceiling passed,” he said.