Published: Thu, September 07, 2017
Worldwide | By Gretchen Simon

Mnuchin to Congress: Tie Debt Ceiling to Harvey Relief

Mnuchin to Congress: Tie Debt Ceiling to Harvey Relief

The US House of Representatives Wednesday approved in a almost unanimous vote a $7.85-bn package of emergency aid for victims of Hurricane Harvey, in a rare show of unity by the bitterly divided chamber.

This week's package is just an early downpayment, with $7.4 billion going to FEMA and another $450 million for the Small Business Administration, which doles out loans to help small businesses get back on their feet after disasters. For instance, the White House is urging Congress to include disaster relief funding in the vote to raise the debt ceiling.

The US will introduce the single bill on debt ceiling, funding the government until December 15 and aid for Hurricane Harvey relief efforts. "Given Republican difficulty in finding the votes for their plan, we believe this proposal offers a bipartisan path forward to ensure prompt delivery of Harvey aid as well as avoiding a default, while both sides work together to address government funding, Dreamers, and health care".

Speaker of the House Paul Ryan slammed the addition, claiming Senate Democrats and Republicans were playing politics with hurricane victims' lives. But many conservative Republicans oppose tying Harvey aid to a debt ceiling measure without related reforms. GOP leaders know that the debt ceiling must be increased, or else a USA debt default with damaging economic consequences would ensue.

"I can not believe the Republicans are extending the debt ceiling-I am a Republican & I am embarrassed!", he tweeted.

The Treasury needs the debt limit raised in the coming weeks in order to continue borrowing on the financial markets to pay bills, including interest on debt, and avoid default.

The House will ultimately have to vote on the revised Senate measure before the relief money would begin flowing.

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To increase the amount of money flowing from the federal government to Texas and to those affected by Harvey, Congress will need to raise the debt ceiling, and then agree to appropriate the needed funds. The White House is said to want to extend the debt limit to move back the specter of a USA default until after Congress can address funding for the full fiscal year and the Trump administration's tax-overhaul efforts.

"The idea of coupling an increase in the debt ceiling with a Harvey spending bill is equally abhorrent", Club for Growth President David McIntosh said in a statement.

Trump's deal with Democrats came after a tumultuous August, when Trump attacked Republican Senate Majority Leader Mitch McConnell repeatedly, and several of rank-and-file members.

Lawmakers returned to Washington on Tuesday facing fast-approaching deadlines, including pressing demands to replenish dwindling disaster aid reserves as Texas and Louisiana dig out from Harvey and as an even more powerful hurricane, Irma, bears down on the U.S. The GOP leaders had no heads up or warning that Trump's decision would happen, Republican officials told CNN.

The Democratic leaders also stressed that they want to see the DREAM Act - which would put the program into law - "come to the floor and pass as soon as possible".

But Trump disagreed and signed on to the compromise to quickly address the needs of Harvey victims and to raise the debt ceiling to avoid an unprecedented USA default on bonds.

"If we can deal with DACA in the next 12 days, I frankly think the votes are there", Hoyer said.

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