Ryan Sees Debt Hike With Strings as Treasury Avoids Default

By Jonathan Nicholson

House Speaker Paul Ryan (R-Wis.) said he doubts any increase to the federal debt limit could pass the House by itself, potentially setting up a fall showdown over the issue as Treasury fights to avoid default.

House Democratic leaders have said they would want a so-called clean debt limit hike—with no other controversial policies attached—in exchange for their support should Republicans be unable to muster the needed votes on their side of the aisle. Since taking power in 2011, House Republicans have often had difficulty wrangling those votes.

“My guess is it won’t be a clean debt ceiling. I don’t remember when we’ve done one of those. We’ve always done something where we bring legislation attached to it as well,” Ryan said in an interview on CNN March 16.

“We have been discussing with Treasury the need to address this and the various options we have,” Ryan said. “We will come up with a solution and we’ll handle this.”

‘Full Faith and Credit.’

Ryan’s comments came as the Treasury Department formally notified Congress March 16 it was at the limit and was taking more steps to avoid breaching it.

“I respectfully urge Congress to protect the full faith and credit of the United States by acting to increase the statutory debt limit as soon as possible,” Mnuchin said in a letter sent to Democratic and Republican congressional leaders. He said he had taken the first of a series of “extraordinary measures"—basically, accounting maneuvers—to stay below the limit by suspending issues of special Treasury securities to state and local governments.

Mnuchin said he also planned to stop regular investments in three government retirement and benefit funds to stay below the limit. The funds would be made whole again after the debt limit is increased or again suspended, as has been the case in the past.

$19.866 Trillion

The debt ceiling has been suspended since late 2015, with the suspension ending March 15. The ceiling reset March 16 at a higher level to include debt incurred during the suspension period but also leaving Treasury at the limit. According to Treasury data, the debt subject to the limit stood at $19.866 trillion as of March 15.

The accounting moves, along with incoming tax revenues, are expected to give Treasury breathing room to keep borrowing at least into early fall. The Bipartisan Policy Center has projected Treasury has enough room to keep borrowing until October or November, but other forecasts have estimated Treasury could run out of room in September.

Republicans already have a full legislative plate for the upcoming months, with health-care legislation, a continuing resolution to wrap up appropriations for fiscal 2017, a fiscal 2018 budget resolution and an overhaul of the tax code. But if they delay dealing with the debt limit, it could increase Democrats’ leverage should the GOP need their votes to pass a debt limit hike.

Creditworthiness at Risk

Democrats have already said they will not be backed into a corner on the issue.

“A) We will support a clean debt limit extension, period. B) We will not, however, be put in a position where the Republicans irresponsibly put the debt creditworthiness of the United States at risk by putting something in the bill that is objectionable to us, and they can’t get the votes on their side to extend the debt limit,” Rep. Steny Hoyer (D-Md.) told reporters March 14.

However, Hoyer said items that were agreed upon by both parties could go into a debt limit hike, as has happened in the past.

To contact the reporter on this story: Jonathan Nicholson in Washington at jnicholson@bna.com

To contact the editor responsible for this story: Paul Hendrie at pHendrie@bna.com

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