Mick Mulvaney, President Trump's fiscally conservative budget director, said Wednesday that he favors attaching spending reforms to any increase in the federal debt ceiling, rather than the "clean" hike requested by Treasury Secretary Steven Mnuchin.
The Office of Management and Budget director said Wednesday in an interview with the Washington Examiner that the White House is discussing which strategy to employ to raise the debt ceiling and hasn't arrived at a position.
Last week, Mnuchin suggested in congressional testimony that the ceiling, which limits the Treasury's ability to borrow to make incoming payments, needs to be raised before Congress leaves for its August recess.
Mnuchin also asked for Congress to pass a bill that simply raised the debt ceiling without any conditions attached. The federal debt is right at the limit of roughly $20 trillion, and Mnuchin is moving funds around to ensure that all payments are made. If the limit is not raised in time, however, the prospect of a default on the debt would increase.
But Mulvaney said Wednesday that Mnuchin's comments did not necessarily represent the stance of the administration as a whole and downplayed the threat of a default.
In internal administration talks this week regarding a congressional vote to raise the debt ceiling, Mulvaney said he has expressed that he would "like to see things attached to it that drive certain spending reforms and debt reforms in the future."
Mulvaney compared the debt ceiling to a "smoke alarm." When the ceiling is reached, he said, "it's a warning that we've now, once again, spent more than we have. It has traditionally been used to step back and try and maybe assess why we are spending more than we have, and what are we are going to do about it."
In the past, Treasury secretaries of both parties have warned that there is no alternative to Congress voting to raise the debt ceiling on time. On leaving office in January, Obama Treasury Secretary Jack Lew called on Congress to change the law to prevent the debt ceiling vote from being used as a tool in fiscal negotiations. In its current form, he argued, it is "nihilistic" and a "weapon" used by irresponsible actors in Congress.
During his tenure as a member of Congress representing South Carolina, Mulvaney pushed for spending reforms tied to the debt ceiling vote and argued that the consequences of failing to raise the debt ceiling in time might not be as dire as portrayed by the Obama administration.
On Wednesday, he stood by those views, stating that "we're never going to default on our debt" regardless of what happens.
The question of whether the federal government missing a payment on something other than the debt would constitute a default remains "open for discussion," he said, adding that it was "silly" to equate missing a payment on interest on the debt with missing a payment through the park service.
In recent years, House Republicans have advanced legislation that would require the Treasury, if it exhausted its ability to make all payments in full and on time, to prioritize payments on the debt. Treasury officials in the past have said that prioritizing payments while maintaining investor confidence would be impossible. Last year, though, Republicans on the House Financial Services Committee, of which Mulvaney was a member, accused the Obama administration of misleading the public about its planning for such a scenario to gain leverage over the GOP in negotiations.