The U.S. government will be able to keep paying its debts through at least the beginning of September, Treasury Secretary Steven Mnuchin told a House panel on Monday, The Hill reports.
Mnuchin did not give lawmakers a hard deadline for when the debt ceiling needed to be raised but said it could wait until after Congress’s August recess.
“If for whatever reason Congress does not act before August, we do have backup plans that we can fund the government. That is not the timeframe that would create a serious problem” he told the House Appropriations Subcommittee on Financial Services and General Government.
However, Mnuchin did not provide any details on “backup plans” for managing the nation’s debt.
An early September deadline would pose challenges for Congress if it is a hard deadline. Lawmakers are not scheduled to return to Washington until after Labor Day, which would give them precious few legislative days to deal with raising the debt limit if the deadline is in early September.
In the past, failure to act as the debt ceiling deadline approached, put markets on edge, raising borrowing costs and losing the U.S. perfect credit rating from S&P. Last week, S&P kept its outlook for the U.S. stable.
“It remains our view that the ensuing debate about raising or suspending the ceiling weighs on the economy,” the ratings agency said in its report, expressing confidence that action would be taken.
Technically, the U.S. passed the debt ceiling in March and has been using “extraordinary measures” to pay its bills ever since.
It is those measures that are expected to reach their limits in the forthcoming period, potentially leading the U.S. to default on its debts, though it could buy time by postponing payments for other government services, such as employee paychecks, to begin with. The debt ceiling issue is part of a packed summer legislative agenda.
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