Mnuchin: Congress Should Tie Harvey Aid to a Federal Debt Limit Increase

Did Steve Mnuchin's Eclipse Trip Skirt Ethics Rules?

Treasury Secretary Steven Mnuchin said Sunday that he and President Donald Trump want a higher debt limit linked to Hurricane Harvey relief funding.

Congress had largely been expected since the deadly storm hit southeast Texas on August 25 to pass a spending bill free of amendments, add-ons or other legislation to avoid the kind of political wrangling that for months delayed emergency funding for 2012's Superstorm Sandy. In either case, traders are wary of the political gamesmanship that's become all too familiar around the debt ceiling.

Abbott, who is advocating for U.S. government aid for his state's recovery, said the damage would exceed that of Katrina, the storm that devastated New Orleans and surrounding areas in 2005, and Sandy, which overwhelmed NY city and the U.S. Northeast in 2012. While Mnuchin had previously said the final limit to raise the debt ceiling was September 29, on Sunday he said that the deadline has gotten closer due to the unexpected spending on Harvey aid.

"Without raising the debt limit, I am not comfortable that we will get money to Texas this month to rebuild", Mnuchin said on Fox News Sunday.

"That sends all the wrong message: 'Let's go ahead and increase the debt ceiling, and by the way, while we're doing it let's go ahead and spend another $15, $20 billion?' That's not to undercut the importance of Harvey relief".

The U.S. government hit the $19.8 trillion debt limit in March and the Treasury Department has been using accounting maneuvers to free up borrowing.

But on Sunday, he said that deadline had moved up due to unexpected new spending on Harvey.

Goldman Sachs, an American financial services company, estimated that failure to raise the ceiling would force a government spending cut equal to between 3 and 4 percent of United States gross domestic product, which would have crippling economic consequences.

"Our first priority is to make sure that the state gets money", Mnuchin also said Sunday.

But Houston Mayor Sylvester Turner said his city was making progress on several fronts, resuming city services and helping get people into housing and out of emergency shelters.

Trump in recent weeks suggested that he'd "close down" the government if the resolution doesn't include money for his campaign-promised U.S. -Mexico border wall. "(But) I would say the president and my first objective right now is for the people of Texas and make sure we get the funding to do that".

Rates on Treasury bills maturing Oct.5, one of the maturities most vulnerable to a failed debt-ceiling increase, rose last week to 1.21 per cent from 1.12 per cent a week earlier.

Trump plans to meet with congressional leaders from both parties this week.

Mnuchin said if Congress appropriates the money, but he doesn't have the ability to borrow more money and pay for it, "we're not going to be able to get that money to the state".

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