Treasury Secretary Steven Mnuchin called on Congress Thursday to lift the federal debt ceiling before leaving for August recess, adding that he has no plans for paying out only interest on the debt if the limit isn't raised.
"I have no intent on prioritizing, I think that doesn't make sense," Mnuchin said at a House Financial Services Committee hearing. "The government should honor all of its obligations and the debt limit should be raised."
Mnuchin also indicated that he would favor getting rid of the debt ceiling.
Currently, the federal debt is at the limit of just under $20 trillion. For several months, Mnuchin has been moving around government accounts to free up debt to ensure that all payments are made.
But eventually he will run out of maneuvers and have only incoming tax revenue with which to pay the government's bills. The Congressional Budget Office has estimated that that moment is likely to come in October. Mnuchin said Thursday he was comfortable that he could pay incoming bills on time into September.
Some Republicans, including Office of Management and Budget Director Mick Mulvaney, have suggested that the Treasury would never be faced with a default on the federal debt, an outcome that would upset world markets. Instead, some conservatives argue, the Treasury could "prioritize" interest payments, while missing other payments. That way, the prospect of a financial crisis would be avoided even without the debt ceiling being raised.
Past treasury secretaries have said, however, as Mnuchin did Thursday, that such an approach would not be feasible.
Congressional Republicans have yet to spell out a legislative path for raising the debt ceiling. Many conservatives want to attach spending cuts or budgetary reforms to a vote to lift the limit.
Raising the debt ceiling does not authorize new spending. Rather, it permits the Treasury to borrow to pay for bills that Congress already incurred.
Mnuchin said Thursday that he doesn't favor keeping the debt ceiling, saying that he was for "very strict control of spending money. But once we've agred to spend the money, we should make sure the government can pay for it."