President Trump is willing to up his proposed debt ceiling increase from the current $800 billion to $1.8 trillion, the White House announced Tuesday, just hours after Democratic leaders called for the president to hold off on any increase.
Trump will also demand that spending increases go into a special fund that can be accessed on military spending that expires at the end of the year, according to a senior administration official.
The administration is now considering how to pay for the increase in the debt ceiling. Treasury Secretary Steven Mnuchin has said that the extra $200 billion could be paid out in monthly installments instead of a one-time payment, raising the possibility that the market could continue functioning as normal.
But that option was dismissed by lawmakers on the Republican side. “That was a ridiculous position,” said Rep. Mark Walker, R-N.C., chairman of the Republican Study Committee, a group of 163 Republican lawmakers. “That’s pure politics. He owes his credibility to the markets, not the Americans who are seeing their savings wiped out by these market moves.”
Mnuchin had suggested in an interview with The Wall Street Journal last week that Treasury could be able to pay off $200 billion in debt payments in just 10 days, by transferring funds from other programs. That would take the president into next year if the spending cuts are put into place before the nation reaches the debt ceiling.
However, Senate Majority Leader Mitch McConnell said Tuesday that the plan was unlikely to pass Congress. “We are not going to appropriate money for the $200 billion they have in mind and perhaps what they can achieve is setting up some proposal over the next weeks or months that would achieve similar results,” he said.
Without an increase in the debt ceiling, the U.S. Treasury Department is expected to exhaust its emergency funding measures by the end of October.
Treasury cannot just dip into tax payments and other financial assets to increase the government’s authority to pay its bills. It must sell bonds on the open market — an additional borrowing the administration said it hoped to avoid.
Congress is also negotiating over whether it will increase the government’s statutory spending limit — a feature of the debt ceiling legislation that includes a mechanism for automatically cutting spending in certain years. Republicans proposed ending that provision, known as sequestration, but Democrats have objected.
On Monday, Democratic congressional leaders pressed the president to hold off on any increase to the debt ceiling.
“If he sends us a blank check — if he sends us a blank check like he did last time — we’re going to call him out on it,” Senate Minority Leader Chuck Schumer, D-N.Y., said.
Administration officials still believe the first debt-ceiling increase could be sent to Congress before Nov. 1, a senior administration official said.
It is “almost an official start” of the shutdown, said Rep. Tom Cole, R-Okla., a senior appropriator, who estimated that a $1.8 trillion increase would take about a week to process.
“I think the market is well capable of understanding that,” he said.
An increase in the debt ceiling is “not a weapon of mass destruction,” he added. “But it’s hardly the most important one out there.”