Looming debt limit divides Trump’s treasury and budget chiefs

WASHINGTON — The two people President Donald Trump has chosen to manage the federal budget appear to be at odds over how to tackle their first assignment: handling the debt limit.

Treasury secretary nominee Steven Mnuchin and Trump’s choice to head the Office of Management and Budget, Mick Mulvaney, face their first joint test in the run-up to March 16, when the debt-limit suspension period expires. Failure to agree means investors in the world’s deepest debt market may grow uneasy about the potential of a U.S. default.

The debt limit is a favorite bargaining chip of Republicans who are concerned about the nation’s finances, which could worsen as Trump breaks with the party’s fiscal hawks in pushing tax cuts and more spending.

A co-founder of the conservative House Freedom Caucus, Mulvaney used his vote on the debt ceiling to push President Barack Obama’s administration for spending cuts, and the incoming OMB director recently downplayed the dangers of defaulting. That puts him out of sync with Mnuchin, who has cautioned against playing politics with the country’s debt.

“Honoring the full faith and credit of our outstanding debt is a critical commitment,” Mnuchin said in written replies to senators’ questions for his nomination process. “My responsibility as secretary would be to pursue all means available to the treasury to meet this commitment, including historic extraordinary measures that have been employed by necessity in the past.”

A crisis isn’t imminent. The Treasury Department can use extraordinary accounting measures to stay below the ceiling, possibly until the second half of this year.