When lawmakers return next month from recess, they’ll begin butting heads over raising the debt ceiling — an increasingly commonplace battle that threatens both federal employee pay and the world economy if the U.S. defaults on its debt.
But despite his track record on the issue, Office of Management and Budget Director Mick Mulvaney said Thursday there is no question the debt ceiling will be raised.
“The United States will never default on its debt,” Mulvaney wrote Thursday in a Washington Post letter to the editor. “[The debt ceiling] should be raised in the simplest manner possible. On all those points, Treasury Secretary Steven Mnuchin, the president and I are of one mind.”
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Mulvaney’s op-ed came in direct response to a column published Monday in the Post, in which opinion writer Catherine Rampell listed a number of instances when Mulvaney opposed a clean debt ceiling raise. Rampell insinuated that Mulvaney’s previous resistance to the ceiling hike showed he was “hell-bent on wreaking a global crisis,” and made him “the most dangerous man in Washington.”
The OMB director used much of his column to discredit Rampell’s assessment, saying it was based entirely on “fake news.” However, he voted against raising the debt ceiling multiple times during his six-year tenure as a Republican congressman, and as recently as Sunday, he voiced his disapproval for a hike that isn’t accompanied by spending cuts.
Congress must vote on legislation to raise the current $19.8 trillion ceiling by Sept. 29 to avoid the government shutting down and potentially defaulting on its obligations. In June, the Government Accountability Office estimated that without an increased debt limit, the Treasury would run out of money in early- to mid-October.
Default would not only send the global financial system into turmoil, but may leave many federal employees without pay. President Obama and then-Treasury Secretary Timothy Geithner both warned during debates over raising the debt ceiling in the previous administration that troops, government workers and contractors might lose their paychecks and benefits in the event of a default. A 2013 report from the Bipartisan Policy Center highlighted default scenarios when the government would have to skip payments to workers, or even prioritize some employees’ compensation over others.
The Treasury has already taken a number of measures to keep a default at bay, including suspending investments into the Thrift Savings Plan’s government securities (G) fund. TSP officials reassured investors the action would have no effect in the long-term because G Fund earnings are fully guaranteed by the federal government.