Conservatives Huddle at White House on Debt Limit Increase

Unified message sought after mixed signals from Treasury and OMB

OMB Director Mick Mulvaney and Treasury Secretary Steve Mnuchin have been divided on a debt limit increase . (Photo By Tom Williams/CQ Roll Call)

Several major conservative organizations have the ear of the White House in urging that the Trump administration put forward a unified position on the debt limit, one they hope will be accompanied by legislation to reduce spending and shrink the $19.8 trillion debt.

Up to now, members of the groups say, they have been hearing a mixed message, with Treasury Secretary Steven Mnuchin calling for a so-called clean debt limit increase and Office of Management and Budget Director Mick Mulvaney advocating using the debt ceiling as a vehicle to cut spending.

One GOP aide said he expects the House Republican conference to discuss the debt limit during its first planning conference meeting when it returns from recess next week.

In a White House meeting on May 26, groups invited to air their views included the Club for Growth, FreedomWorks, Freedom Partners, Heritage Foundation and Heritage Action, as well as staff from the House Freedom Caucus and Republican Study Committee. They all gathered with staff from Treasury and the Office of Management and Budget to discuss the debt limit, at the Old Executive Office Building.

“The groups basically asked that the White House lead on the issue and decide what the position is going to be and then put that forth strongly,” said one participant in the meeting who spoke on condition of not being identified. “Obviously, from a conservative perspective, that position should be that some progress needs to be made toward putting the budget on a path to balance and beginning to turn the debt curve from ever-rising to starting to drop as a percentage of GDP.”

Participants said the meeting was set up as a listening session for the administration to hear their views.

They discussed several options including:

  • Pairing a debt limit increase with prioritizing the payment of interest in case the debt limit is not raised.
  • A balanced budget amendment.
  • Caps on mandatory spending.
  • Extending the sequester.
  • Adding work requirements to government assistance programs.
  • Matching any debt limit increase with spending cuts, as was done with the 2011 deficit reduction law.

Mnuchin last week asked Congress for a debt limit increase before the August recess.

Extraordinary Measures

The latest debt limit suspension lasted until March 15, when the debt limit reset to the level of accumulated debt at that time. Mnuchin has employed what are called “extraordinary measures” to allow the government to continue to borrow money after the suspension expired.

After the extraordinary measures are exhausted, the federal government would be left with cash on hand and incoming receipts. Because the government is running deficits, that would not be enough to pay all of the government’s bills and debt obligations as they are due, including interest on government bonds.

The Treasury Department has warned in the past that defaulting on the government’s obligations would have catastrophic and unprecedented consequences, including precipitating another financial crisis, and would raise the government's borrowing costs.

Asked for reaction to the groups’ request for the White House to adopt a unified position on how to raise the debt limit, White House Assistant Press Secretary Natalie M. Strom said it is a decision Congress has to make.

“The administration’s position is that the debt limit must be increased,” she said in an email. “The vehicle for increasing the debt limit is ultimately up to Congress.”

Strom said even if President Donald Trump’s fiscal 2018 budget were adopted in full, “the debt limit will need to be increased.” She said the administration “will work with Congress to ensure that the debt limit is increased.”

The hard-right Freedom Caucus, conservative RSC and other Republican lawmakers have pushed for spending cuts in exchange for debt ceiling increases in the past, with limited success since the 2011 debt limit increase.

Last week, the Freedom Caucus issued a statement saying it opposes a clean debt limit increase, insists any increase be paired with policy that addresses “unsustainable spending,” and wants the debt limit dealt with before the August recess.

The Heritage Foundation is advocating coupling a debt limit increase with a broader spending cap that would encompass the mandatory spending programs that make up about two-thirds of the budget as well as discretionary spending.

Romina Boccia, deputy director of the Thomas A. Roe Institute at the Heritage Foundation, said that given the reluctance by Congress and the president to tackle Medicare and Social Security, “the only way we’re really going to have reasonable discussions around the true tradeoffs that we’re facing on the budget is to force those decisions with the threat of automatic spending cuts.”

She said that could occur if Congress caps all federal spending and enforces the cap with potential across-the-board spending cuts that include a host of mandatory spending programs such as Medicaid that are currently exempt from cuts.

Not Enough Votes?

Andy Roth, vice president for government affairs at Club for Growth, said it would be “ridiculous for a Republican administration and a Republican- controlled Congress to just issue a clean debt ceiling increase.”

“And thankfully,” he added, “I don’t think that they have the votes to do a clean increase.”

Roth said as a result, Republican lawmakers and the administration should figure out what it takes to raise the debt limit.

“If the administration and congressional leaders want to do a small increase then we can talk about small but meaningful reforms in exchange,” he said. “If they want to do a big increase then we need to talk about big structural reforms in exchange.”

House Speaker Paul D. Ryan, R-Wis., told reporters May 25 that leadership is talking with members and the administration about the debt limit and that the “issue will get resolved.”

Emily Schillinger, a spokeswoman for Ways and Means Chairman Kevin Brady, said in a statement that the Texas Republican “believes it’s critically important to preserve the full faith and credit of the United States — and also rein in Washington spending. He will continue to work with the Administration to determine the best available way to achieve both while growing our economy.”

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