Mnuchin: US will hit debt limit by Sept. 29

Mnuchin: US will hit debt limit by Sept. 29
© Greg Nash

Treasury Secretary Steve Mnuchin informed Congress on Friday that action would be needed on the debt ceiling by September 29th.

"Based upon our available information, I believe that it is critical that Congress act to increase the nation's borrowing authority by September 29, 2017. I urge Congress to act promptly on this important matter," Mnuchin wrote in a letter addressed to Speaker Paul RyanPaul Davis RyanRyan, GOP lawmaker trade 'bad dad jokes' ahead of Father's Day Hugh Hewitt to Trump: 'It is 100 percent wrong to separate border-crossing families' White House walks back Trump's rejection of immigration compromise MORE (R-Wis.).

The Treasury Department estimates it will run out of funds to pay its debts and interest on that date and financial markets will be watching loosely for action. If Congress fails to act, the U.S. would default.

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The date falls on a Friday and coincides with the last weekday of fiscal 2017.

If a deal is not reached to fund the government, either through new appropriations or a continuing resolution, the government would also shut down on that date.

The parallel deadlines could make it likely that agreements over handling the two fraught issues of debt limit and spending will be bundled together in negotiations between Congressional Democrats and Republicans.

Previous showdowns over the debt limit in 2011 and 2013 spooked markets enough to cause ratings agency S&P to downgrade the U.S. credit rating, and led to billions in increased borrowing costs.

Mnuchin had urged Congress to take care of the issue ahead of the August recess, which began Friday afternoon for the House.