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Debt ceiling could be hit late this summer: Sources

  • The White House is starting to warn that the U.S. government could reach its borrowing limit late this summer -- sooner than previously expected.
  • Senior administration staff delivered the message to conservative groups this week.
  • The CBO had previously said the debt ceiling wouldn't be reached until fall.

The White House is starting to warn that the U.S. government could reach its borrowing limit late this summer -- sooner than previously expected, according to two people familiar with the discussions.

Senior staff from the White House, the Treasury Department and the Office of Management and Budget delivered the message to conservative groups during a meeting yesterday at the Eisenhower Executive Office Building, the people said. The Congressional Budget Office had forecast in March that the debt ceiling would not previously be hit until the fall. In a letter to Congress this spring, Treasury estimated only that the deadline would come during the second half of the year.

But in congressional testimony this week, Budget Director Mick Mulvaney said that tax receipts were coming in more slowly than anticipated. That could push the deadline several weeks earlier, he said.

In his testimony on Capitol Hill this week, Treasury Secretary Steven Mnuchin did not directly address when the government would exhaust its borrowing authority. However, he repeatedly urged lawmakers to raise the debt limit before leaving for August recess. A person with knowledge of the process said it was unlikely the limit would be hit while Congress was not in session

But the two sources said administration officials indicated during the meeting that the deadline could potentially hit during recess or shortly after, leaving lawmakers with no time to pass a bill to raise it. The actual date of the deadline remains unclear and tends to be a moving target.

Conservatives are already girding for a battle over raising the debt ceiling. The House Freedom Caucus said this week that any increase in the borrowing limit should be paired with spending cuts. Mnuchin has said he prefers a "clean" bill.