Funds for Harvey victims may be delayed without debt limit increase: Mnuchin

Jerome Frank
September 4, 2017

Even that amount could be delayed unless Congress quickly increases the government's debt ceiling, Mr Mnuchin said, as the United States is on track to hit its mandated borrowing limit by the end of the month unless Congress increases it.

Now that the debt ceiling needs to be raised again, President Trump has signaled that he doesn't want a messy fight over it.

In an interview with "Fox News Sunday" Steve Mnuchin called the North's test of a hydrogen bomb "completely unacceptable behavior", adding that he will draft a sanctions package to send to the president for his strong consideration.

The government's cash reserves are running low because the debt limit has actually already been reached, and the Treasury Department is using various accounting measures to cover expenses. In the wake of Hurricane Harvey, however, Mnuchin told CNBC on Thursday that the deadline could move up a few days. Our first priority is to make sure that the state gets money.

To put it simply, the October maturities have become "hot potatoes" in the $1.7 trillion T-bill market, said Mark Cabana, head of U.S. short rates strategy at Bank of America Corp. However, Mnuchin on Sunday declined to discuss the issue. But the letter makes it clear that the emergency spending would accelerate the timetable for raising the limit and conveys the idea that failure to pay obligations could imperil essential government services when residents in Texas need the help.

Mnuchin: Congress Should Tie Harvey Aid to a Federal Debt Limit Increase
In either case, traders are wary of the political gamesmanship that's become all too familiar around the debt ceiling. Mnuchin said he thinks if the debt limit isn't raised, that will interfere with the storm relief effort.

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"I feel a lot of Houston is drying out, and I don't want them to forget about us", she said. "(But) I would say the president and my first objective right now is for the people of Texas and make sure we get the funding to do that".

Republican lawmakers, who control both houses of Congress, have traditionally resisted raising the debt ceiling, but linking the issue to Harvey aid could force their hand with people suffering and large areas of the fourth-largest USA city under water. Congressional leaders would have to look at whether the votes are there, he said.

"That's one way to do it", Blunt said on NBC's "Meet the Press".

He also suggested the White House wasn't overly concerned about whether the plan includes ways to offset the loss of federal revenue from the tax cuts. "So that's going to have some impact on our September spending", Mnuchin said.

"I think everyone wants a clean supplemental", Bossert told reporters. "But we'll be working with them on that".

Other reports by Guamnewswatch

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