Treasury: Trump has plan if debt limit not raised by August

WASHINGTON (AP) — The Trump administration has a backup plan to keep the government from defaulting on its financial obligations even if Congress misses an August deadline to raise the debt limit, Treasury Secretary Steven Mnuchin told a congressional panel today.

Mnuchin had previously set an August deadline for the federal government to avoid a catastrophic default. Mnuchin said he still prefers Congress increase the government's authority to borrow before lawmakers leave on a five-week break in August.

He said, however, he is "comfortable" the Treasury Department can meet the government's financial obligations through the start of September.

"If for whatever reason Congress does not act before August we do have backup plans that we can fund the government," Mnuchin said without elaborating. "So I want to make it clear that that is not the time frame that would create a serious problem."

The federal government technically hit the debt limit in March, but Treasury has been using accounting steps known as "extraordinary measures" to avoid a default.

As of Friday, the Treasury had a cash balance of $148 billion, down from $204 billion a month ago. The national debt is nearly $20 trillion, including money owed to several federal programs.

Raising the debt limit has become a politically-charged vote in Congress, even though economists believe that an unprecedented default would catastrophic for the economy. Republicans, who control Congress and the White House, are struggling to come up with the votes to raise debt limit, with some members demanding spending cuts in exchange for their vote.