Wednesday, 7 June 2017

Trump made a critical decision in the coming debt-ceiling fight

President Donald Trump arriving for a signing ceremony with Treasury Secretary Steven Mnuchin at the Treasury Department on April 21.

President Donald Trump told Republican congressional leaders on Tuesday that Treasury Secretary Steven Mnuchin would lead the negotiations on the debt ceiling, indicating a key part of the administration's stance on the battle to come.


According to Ben White, Burgess Everett, and John Bresnahan at Politico, Trump told GOP leaders from both chambers of Congress in a meeting at the White House that "Mnuchin is that guy" for the debt-ceiling negotiations.

The debt ceiling is a level the federal government's outstanding debt, mostly in Treasury notes, can't exceed. If it is not raised by sometime in late summer, the US could be forced to default on some of its debt.

Mnuchin favors a "clean" hike to the debt ceiling. Mick Mulvaney, the director of the Office of Management and Budget, has on the other hand said he favors a hike with stipulations that could make it politically difficult to pass.

The diverging positions led to a confusing situation in which lawmakers were unsure who was speaking for the White House. It was further complicated when Gary Cohn, the key Trump adviser who leads the National Economic Council, told CNBC that the administration was open to adding riders to the debt-ceiling legislation.

"In a perfect world you would love to have a clean debt ceiling," Cohn added. "But if we need to get things attached to get it through, we'll attach things."

Mulvaney, a deficit hawk going back to his days as a congressional member of the hardline conservative House Freedom Caucus, told the Washington Examiner that spending cuts and deficit-reduction measures would be part of the ask for the debt-ceiling bill.

Such additions would placate conservatives like those on the Freedom Caucus but would make the bill toxic for Democrats and leave a narrower potential path for the bill to advance through Congress.

If the debt ceiling is not raised, the implications for the global economy could be devastating. The debt-ceiling fight in 2011, in which Congress passed last-minute legislation to avoid a default, resulted in a stock market correction and the first downgrade of the US's credit rating.

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