Mixed signals complicate GOP debt hike strategies

Mixed signals from the Trump administration are complicating efforts by Republicans in Congress to come up with a specific plan for raising the debt ceiling.

Treasury Secretary Steven Mnuchin has advocated for a clean debt ceiling hike, but Budget Director Mick Mulvaney and economic adviser Gary Cohn have said they support attaching spending cuts or other budgetary reforms.

Mnuchin also says he wants Congress to act before the August recess, though President Trump himself reportedly told congressional leaders at a White House meeting on Tuesday that he’d like the debt ceiling to be done after the recess.

On Tuesday, the Trump administration assigned Mnuchin as the point person on the debt issue, a decision interpreted as an effort to signal its favored approach to Congress.

{mosads}But Speaker Paul Ryan (R-Wis.), who is under pressure from conservatives to include spending cuts with any debt ceiling hike, chalked the decision to name Mnuchin the point man as a matter of protocol.

“The Treasury secretary always is and should be the person in charge of debt limit negotiations, debt limit legislation. Every Treasury secretary is in charge of that,” he said Wednesday.

The mixed statements are confusing Washington, including members of Congress.

Republicans in particular are looking for more direction from the White House.

“Congress needs more guidance from the administration,” said one Republican Senate staffer.

If Congress doesn’t raise the debt ceiling, the U.S. risks defaulting on its debt, the government would shut down and markets would almost certainly be thrown into havoc.

That makes a debt ceiling bill as much of a must-pass legislation as there is.

For the last eight years, Republicans in Congress have sought to attach spending cuts, regulatory reforms and other measures to the debt ceiling. They’ve used the debt hike, or at least tried to, as leverage to win concessions from a Democratic president.  

With Donald Trump in the White House, the onus for action is more firmly on the GOP, further exposing internal fissures in the party.

Republicans need support from Democrats, at least in the Senate and probably in the House, to pass a measure. But Democrats oppose anything other than a clean hike, and Democratic leaders are signaling they may not even support that.

In the House, the conservative Freedom Caucus has said it will oppose a clean hike and wants to add budgetary reforms. 

“We need to dispose of this crazy idea of a clean debt ceiling increase. We’ll fight that,” said Club for Growth vice president for government affairs Andrew Roth.

“If Republicans continue to fail on their promise to repeal Obamacare and leadership starts raising the limit on America’s credit card by teaming up with liberal Democrats, there are going to be political ramification in 2018 for the Republican party,” he added.

Senator John Cornyn (Texas), the number three Republican Senator, said Tuesday that a clean lift was not his first choice, but that there was still no final decision.

“That’s really a decision for us to negotiate with the administration,” he said.

Further complicating matters is the fact that Republicans face a tight legislative schedule.

Senate Republicans hope to pass ObamaCare repeal-and-replace legislation this summer, though the GOP is badly divided on that issue. Passage of the healthcare measure would pave the way for work on tax reform.

Congress also must pass legislation before the end of September to keep the government funded.

“The challenge is how do you fit all this stuff together? There doesn’t seem to be, at least right now, a concerted, holistic plan in terms of how all the major deadlines and all the major policy ambitions fit together to be accomplished before the midterm election season kicks off,” said Heritage Action Vice President Dan Holler.

Mnuchin has not given a formal drop-dead deadline for when the debt ceiling must be raised, though economists estimate that it will likely be in September.

The same economists say it would be better to take care of it sooner than later to comfort financial markets, and warn that the estimates may change by a number of weeks as new financial data comes in.

Mnuchin, for his part, has said he wants to avoid drama in the debt ceiling talks to avoid panicking the markets.

Beyond the big questions of when to pass it and whether to attach a rider, further complicating factors surround the debt ceiling.

“Consideration and passage could take so many different forms. Is it going to be part of the budget? Is it going to be standalone? What’s going to be the ask?” asked Club for Growth’s Roth. Thus far, he said, few decisions if any appear to have been made within the administration.

Democrats, in the meantime, have yet to settle on a strategy. Many are sticking to the traditional line that they demand a clean hike, but both House Minority Leader Nancy Pelosi (Calif.) and Senate Minority Leader Charles Schumer (N.Y.) have toyed with the idea of linking the debt ceiling to Republican tax reforms.

On Wednesday, House Minority Whip Rep. Steny Hoyer (D-Md.) seemed to pour water on that approach.

“I think it’s not a responsible vote to vote against a debt limit that is clean,” he said.  

Scott Wong and Mike Lillis contributed to this report.