Mnuchin’s first mission: Raise debt ceiling
Trump’s programs will push National Debt beyond $30 trillion by 2024
says currency expert Andrew Gause
Newly confirmed Treasury Secretary Steven Mnuchin’s first mission for the Trump administration will be to try and avert a debt ceiling crisis that could upend markets and cause financial chaos.
The debt ceiling is the country’s legal borrowing limit set by Congress. For years, lawmakers have fought over whether and by how much the ceiling should be increased.
When they can’t agree, they temporarily “suspend” it. And when the suspension ends the debt ceiling resets at the level where it was plus whatever Treasury borrowed in the suspension period.
On March 15, the latest suspension expires and the debt limit will likely reset a little north of $20 trillion.
If Congress has not voted by mid-March to either extend the suspension or raise the ceiling, Mnuchin will have to start using special accounting measures just to keep paying the country’s bills without violating the borrowing limit.
Currency Expert Andrew Gause says Mnuchin might save himself a few trips to Capitol Hill over the next 8 years by asking lawmakers to authorize a one-time boost of Americas borrowing limit to $30 trillion.
According to the numbers,the government will need to borrow at least $10 trillion dollars over the next 8 years just to keep operating at current levels with no new programs launched and no new expenditures, says Gause.
Gause says the true budget deficit for 2016 was $1.4 trillion, and that will continue to be the deficit each year if no new programs are added to the budget and no changes are made to the tax code. Running for 8 years with an annual deficit of $1.4, the congress will need to borrow about 10 trillion dollars, which gets piled upon our existing $20 trillion debt.
“If the President pushes to rebuild the military and repair Americas roads and bridges, additional trillions will be needed,” says Gause.
How high will the national debt climb during the Trump administration?
The debt can easily go beyond $30 trillion, but if Trump is right about tax cuts and infrastructure projects being able to fire up Americas GDP, you may see a balanced budget and a decline in total debt by the end of his presidency, says Gause.
We can also expect 1970s level of inflation at least 10 to 12 percent, as we near the end of Trump’s first term, says Gause.
ABOUT ANDREW GAUSE (WWW.ANDYGAUSE.COM)
Andy Gause is one of Americas foremost experts on the history of US currency. President of SDL Numismatics in Hawthorne, New Jersey, and member of the American Numismatics Association, he is the author of The Secret World of Money and Uncle Sam Cooks the Books.