US Could 'Run Out of Cash' in September, Treasury Warns

Plus, faith in Trump’s phantom health care plan By Yuval Rosenberg and Michael Rainey US Could 'Run Out of Cash' in September, Mnuchin Warns Treasury Secretary Steven Mnuchin warned House Speaker Nancy Pelosi (D-CA) Friday that the federal government could run out of cash sooner than expected and urged Congress to raise the debt ceiling before leaving town for its August recess. “Based on updated projections, there is a scenario in which we run out of cash in early September, before Congress reconvenes,” Mnuchin said in a brief letter to Pelosi. “As such, I request that Congress increase the debt ceiling before Congress leaves for summer recess.” After speaking with Mnuchin, Pelosi said Thursday that she wants lawmakers to raise the debt ceiling before the House leaves town on July 26 for a six-week summer break. “I am personally convinced that we should act on the caps and the debt ceiling,” she said. “Prior to recess.” What’s the holdup? The debt ceiling is currently caught up in negotiations over next year’s spending levels. Lawmakers and the White House have been unable to agree on topline numbers and whether a deal would cover one year or two. And there is little support in Congress for passing a standalone bill focused solely on the debt ceiling. Why is the debt situation deteriorating? Mnuchin’s letter echoes a [report]( earlier this week from the Bipartisan Policy Center that said the “X Date” — the date when the government can no longer pay all of its bills — could arrive as soon as the first two weeks of September. The U.S. technically hit its debt limit in March and has been using “extraordinary measures” to meet its obligations since then. But weaker-than-expected federal revenues, driven in part by the Republican tax cuts along with increased spending, are [driving up the deficit]( and increasing the likelihood that the Treasury runs out of money sooner. What’s next? Mnuchin and Pelosi were expected to speak again Friday. If lawmakers are unable to reach an agreement and the U.S. runs out of cash before Congress comes back to town on September 9, the government could default on some payments, potentially damaging the economy. Poll of The Day: Faith in Trump’s Phantom Health Care Plan American voters aren’t quite sure what to make of the latest lawsuit seeking to strike down the Affordable Care Act. While legal experts have largely dismissed the lawsuit, now before a federal appeals court, as without merit, a new Morning Consult survey of 1,988 registered voters finds a much more divided electorate. Nearly half of voters, 44%, say the GOP-led lawsuit isn’t likely to bring down Obamacare, compared to 37% who say it might. Those views fall along predictably partisan lines: More surprising is that voters who expect the ACA to be overturned express a fairly high level of confidence that President Trump has a plan to replace it. The GOP has thus far [failed to come to a consensus]( about how to replace Obamacare, and Trump has yet to reveal a promised health care plan. Yet 60% of voters who think Obamacare may be struck down are confident the administration has a plan of its own, including 87% of Republicans. Analysts and pundits have warned that, if the lawsuit were to succeed, it would be a [disaster]( for Republicans — and GOP lawmakers have shown little desire to grapple with a health care overhaul again before the 2020 elections. The Morning Consult poll also found that voters are increasingly placing responsibility for the state of the U.S. health care system [on Trump]( — and half of voters say the system has gotten worse over the past decade. [Read more at Morning Consult.]( Map of the Day: Navigating the IRS The Taxpayer Advocate Service — an independent organization within the IRS whose roughly 1,800 employees both assist taxpayers in resolving problems with the tax collection agency and recommend changes aimed at improving the system — released a “subway map” that shows the “the stages of a taxpayer’s journey.” The colorful diagram includes the steps a typical taxpayer takes to prepare and file their tax forms, as well as the many “stations” a tax return can pass through, including processing, audits, appeals and litigation. Not surprisingly, the map is quite complicated. [Click here]( to review a larger version on the taxpayer advocate’s site. Tweet of the Week After a week of setbacks for President Trump’s blueprint to lower prescription drug prices, economist [Ben Ippolito]( of the American Enterprise Institute summed up the status of key administration proposals: Your Prize for Making It Through the Week Scientists in Switzerland have discovered a [new species of dinosaur]( CNN reports — and they were even able to figure out what it ate for its last meal. Have a great weekend! Send your tips and feedback to yrosenberg@thefiscaltimes.com. And please tell your friends they can [sign up here]( to get their own copy of this newsletter. 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