The White House calls for a fallback plan on debt ceiling if budget negotiations fail

Treasury Secretary Steven Mnuchin said on Monday that lawmakers could be forced to raise the debt ceiling without a broader budget agreement if an agreement was not reached as soon as possible, warning that time was running out. to ensure that the government has enough money to pay all its bills. .

White House officials have begun discussions on such a scenario with congressional aides, announced Monday several people about the discussions. They are looking at a plan that would temporarily raise the debt ceiling, maybe a few weeks, to give them more time to negotiate a budget. The fallback plan would aim to avoid the financial crisis if the negotiators were mistaken about the government's balance sheet and the Treasury did not have enough money to make payments while legislators were on the move.

Democrats and Republicans have not told the White House they would approve of such an approach, but it has become an alternative, as they no longer have the time to negotiate a broader budget deal before the departure of the White House. legislator at the end of next week.

The chaotic planning comes after Mnuchin spent more than a week trying to negotiate a bigger deal on budget and debt in Congress.

"I really hope we can reach an agreement quickly," Mnuchin told reporters at the White House. But, "if for some reason, a budget agreement is not reached," before leaving, I expected them to stay or increase the debt ceiling. "

Mnuchin met with Trump about budget discussions Monday morning and spoke with the minority leader in the House, Kevin McCarthy (R-Calif.) And Senate Majority Leader Mitch McConnell (R -Ky.), About the weekend negotiations. Democrats want the White House to agree to increase spending on defense and non-defense programs over the next two years. White House officials have agreed to increase spending, but not as much as the levels demanded by Democrats.

Mnuchin also hinted on Monday that the White House could seek "offsets" for spending increases, which is a way of talking about spending cuts elsewhere in the budget. This is perhaps one of the reasons why an agreement remains elusive, as there are often differences as to the nature of this type of cuts.

As talks drag on, some White House officials have called for a separate measure that would simply raise the debt ceiling to give them more time to negotiate regardless of whether the Treasury can pay. all his bills.

But lawmakers from both parties have told the White House they do not know if they have the right to vote to raise the debt ceiling unless it is part of a larger budget deal. . Mnuchin's decision to launch the public option on Monday may indicate he thinks time is running out, although some Democrats think the White House is trying to pressure them to lift the debt ceiling without doing anything. concessions at the budget talks.

Mnuchin warned that the Treasury could run out of money to pay all of its bills in early September if an agreement on the debt ceiling was not reached before the suspension of work in August, a position that some External experts also found accurate.

If the debt ceiling is not raised on time, the Treasury Department may not have enough money to pay all its bills. This could lead to higher interest rates and a stock market crash, among other things, as this could put into question the total confidence and credit of the United States.

The US government spends a lot more money than it takes revenue. To pay all its bills, the Treasury Department issues debt in order to borrow money. But he can only issue debt within the limits set by the Congress. Last year, Congress suspended this debt limit until March 2019. After the expiry of this suspension, the Treasury Department began taking steps to delay a default. for example by suspending certain investments. But flexibility will be missing soon, warned Mnuchin.

The US government had a debt of about $ 19 trillion when Trump took office, and the total debt of the government has now exceeded $ 22 trillion.

Many Republicans have decried the increase in the debt ceiling under the Obama administration, saying the government should do more to reduce borrowing. But they mostly followed Trump's efforts to increase debt through tax cuts and large increases in spending. Nevertheless, lawmakers do not like votes that simply increase the debt ceiling and prefer to do so as part of a package of measures. That is why many have asked for the integration of raising the debt ceiling as part of a broader budget deal.

Legislators must come up with a new budget by the end of September, because that's when funding for many agencies will expire. If legislators do not fund agencies after September 30, the government will be arrested again. Mnuchin said Monday that the White House did not want to see another stop, but he did not have time to wait until the end of September to settle the debt ceiling and budget negotiations, because the deadline for this cap could be much sooner. .