Mnuchin Warns of 'Late Summer' Default If No Debt-Limit Increase

Treasury Secretary Steven Mnuchin warned that the U.S. government will face a default in “late summer” unless Congress increases the debt ceiling.

Mnuchin, testifying Wednesday before the House Financial Services Committee, said he’s confident lawmakers will raise the debt ceiling before the deadline.

The limit snapped back into place on March 2. So far, the Treasury Department has been able to shift funds and take other so-called extraordinary measures to prevent a default on the government’s debt.

The Bipartisan Policy Center, a research group unaffiliated with either party, estimated this month that a default would occur in October or early November.

“Nobody wants a train wreck next fall, so it makes sense to try to kill two birds with one stone,'' South Dakota Senator John Thune, a member of the chamber's Republican leadership, said Tuesday.

Any agreement would have to pass muster with Democrats who control the House as well as the Republican majority in the Senate.

Congressional Republicans are eager to avoid the $71 billion cut to the Pentagon slated to take place next year and to have a politically damaging repeat of this year's 35-day government shutdown. Without a caps agreement, an agreement on long term spending bills won't be possible, risking a shutdown.