Policy

McConnell, Mnuchin Unequivocal About Avoiding Default on the Debt

Majority leader and Treasury secretary say debt limit will be increased on time

Treasury Secretary Steve Mnuchin expressed confidence the debt limit would be increased. (Tom Williams/CQ Roll Call File Photo)

Senate Majority Leader Mitch McConnell declared without hesitation Monday that Congress will raise the debt limit come September.

“There is zero chance — no chance — we won’t raise the debt ceiling. No chance. America is not going to default, and we’ll get the job done in conjunction with the secretary of the Treasury,” the Kentucky Republican said, appearing alongside Treasury Secretary Steven Mnuchin.

McConnell was in Louisville at a business event with Mnuchin. While the primary focus of the visit was the effort to rewrite the nation’s tax code, the two men made the debt limit a key issue.

“We’re going to get the debt ceiling passed,” Mnuchin said. “I think that everybody understands this is not a Republican issue, this is not a Democrat issue. We need to be able to pay our debts.

“This is about having a clean debt ceiling so that we can maintain the best credit, the reserve currency, and be focused on what we should be focusing on — so many other really important issues for the economy,” Mnuchin said.

McConnell and Mnuchin were making clear that questions about the full faith and credit of the United States would hamper any other legislative efforts, including work on overhauling tax law.

On the tax code, McConnell suggested that House Ways and Means Chairman Kevin Brady, R-Texas, and Senate Finance Chairman Orrin G. Hatch, R-Utah, would have “the same starting point” in terms of a chairman’s mark for the committee process.

Responding to a question about the future of the treatment of carried interest as part of a tax code overhaul, said that almost everything in the current law needs to be on the table to lower rates.

“I think there are only two things that the American people think are actually in the Constitution: The charitable deduction and the home mortgage interest deduction,” McConnell said.

“So, if you’re worried about those two, you can breathe easy,” McConnell said. “For all the rest of you, there’s no point in doing tax reform unless we look at all of these preferences, and carried interest would be among them.”

McConnell also said that a revenue-neutral bill was where he thought “we’re likely to end up.” He said discussions were ongoing.

Changing the tax code in ways that actually lowers revenues could run into procedural problems on the Senate floor under budget reconciliation, unless the tax cuts are temporary.

“Permanent is a lot better than temporary and temporary is a lot better than nothing,” Mnuchin said.

As for the legislative priority ahead of August recess, McConnell again described the failure to pass a bill to repeal and replace the 2010 health care overhaul as a setback. He said he looked forward to seeing what Senate Health, Education, Labor and Pensions Chairman Lamar Alexander, R-Tenn., would be able to produce on a bipartisan basis to stabilize insurance markets.

“Obviously we had a setback on the effort to make dramatic changes to Obamacare,” McConnell said. “The way forward now is somewhat murky,”

McConnell seemed somewhat dubious of the intentions of Senate Democrats as the bipartisan health care hearings and talks kick off when the Senate returns after Labor Day.

“They’re really interested in sending money to insurance companies, but not very interested in reforms,” McConnell said of the Democrats.

McConnell had introduced Mnuchin to the Louisville audience by talking about the Treasury secretary’s movie production efforts.  Mnuchin helped bankroll many Hollywood hits before joining the administration.

McConnell and Mnuchin were set to visit the U.S. government’s gold reserve at Fort Knox later in the day.

“I assume the gold is still there,” Mnuchin said. “It would really be quite a movie and we were to walk in and there were no gold.”

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