US might hit the debt ceiling? Sounds like it's time for House Dems to play hardball

This throws an interesting monkey wrench into events in DC over the next couple of weeks, on top of all of the other craziness in that place.

Treasury Secretary Steven Mnuchin warned House Speaker Nancy Pelosi that the government may run out of cash in early September if Congress doesn’t raise U.S. borrowing authority.

“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 letter to Pelosi on Friday. “As such, I request that Congress increase the debt ceiling before Congress leaves for summer recess.”

Pelosi said Thursday that Congress should act this month to raise the debt ceiling, which was the first time she offered a definitive timeline. It’s not clear that lawmakers and the White House will strike a deal before the House is set to leave town on July 26 for a six-week recess....

The Treasury has been using accounting measures to avoid missing payments since the borrowing limit snapped back into place on March 2. The department’s room to maneuver depends on tax revenue, and the Bipartisan Policy Center, an independent think tank, this week adjusted its estimate to say there is a “significant risk” of defaulting on a key payment in early September.

Rates on bills maturing in mid-to-late September rose Friday, while those in early to mid-October have declined. Before the BPC estimate this week, early to mid-October maturities were the securities that had been under pressure as being most under risk of non-payment if the debt ceiling wasn’t increased in time.

Well, this is one way to deal with the debt ceiling.

A large reason the debt ceiling is coming up faster than expected is shown in the updated US deficit figures that came out this week.

The numbers: The federal government’s June budget deficit narrowed to $8 billion, the Treasury Department reported Thursday, down nearly 90% from the same month a year ago.

The much-lower monthly figure was affected by shifts in the timing of certain federal payments, as well as receipts. Without those shifts the deficit would have been $55 billion, wider than June 2018’s $30 billion shortfall…

The big picture: The budget deficit for the fiscal year to date is widening compared to the first nine months of fiscal 2018, as spending has climbed 7% and receipts have grown by just 3%. Through June, the budget gap totaled $747 billion. Both receipts and outlays are at records for the year to date, a senior Treasury official said. The government’s budget year runs from October through September.

There will still be some distorted comparisons, since July 1 fell on a weekend in both years. But even if you count on the deficit matching what happened from July-September 2018, then we’re looking at a deficit that will be around $900 billion for 2019, or an increase of more than 15%.

The Treasury Statement also hints at why there has been a bit more growth in the Trump Administration so far – higher government spending.

Government spending through June FY 2018 vs FY 2019
FY 2018 $3.148 trillion
FY 2019 $3.356 trillion (+6.6%)

That 6.6% increase is well above the 2019 increase in revenues of 2.7%, which adds to the deficit (also, some of that additional “spending” is in the form of $10 billion in additional money paid to people who got a refund from the Child Tax Credit beyond the taxes they owed).

The flip side is that this extra spending also adds to GDP. And sure enough, if you check the Atlanta Fed’s projections for Q2 2019, it shows that over ¼ of the US’s economic growth for the quarter would come from higher government spending at all levels. As usual, Republicans don’t seem to mind this extra spending and higher deficits if it helps their economy when they’re in office.

But the GOP's deficit-adding policies now add a possibility for Dems in the House, if they choose to take it. If there is a need for a new budget for Fiscal Year 2020 in the next 2 weeks to keep the debt ceiling from blowing up and crashing this Bubbly stock market, then I think it's time for Dems to tell Trump and the rest of the GOP it's time to stop obstructing justice on a lot of other items, stop defying subpoenas, and show up at hearings.

We also can start reducing the deficit by not overcrowding detention facilities, paying $775 an immigrant to private prison companies, and throwing an increasing amount of money at military and border control while our infrastructure continues to fall behind.

And if the Trump/GOPs don't want to budge on that, then we'll hit the debt ceiling and have a shutdown. Sure, that's not "governance", but the GOP gave up on that a long time ago, and it's not the Dems' jobs to keep bailing them out. Once these Bubbles start to burst on Wall Street and on other inflated markets, you can bet GOP leaders will be getting a lot of angry phone calls from people they actually care about and listen to.

It's time for the public to stop being insulated from the consequences of the reckless, lawless behavior of Donald Trump, Mitch McConnell, and the rest of the rotten lot. And yes, that may mean some pain, which you normally wouldn't try to impose on anyone. But these are not normal times, and "business as usual" isn't an adequate answer for our declining situation.