(Repeats without change)
By David Morgan and Trevor Hunnicutt
WASHINGTON/NEW YORK, June 7 The U.S. Congress
may be headed for a reckoning with the federal debt limit within
weeks, thanks to wealthy Americans and corporations deferring
tax payments in the hope that they would benefit from the lower
tax rates promised by President Trump.
Trump promised tax cuts during his election campaign last
year and has reiterated those promises in recent months leading
some wealthy Americans and businesses to shift accounting for
income into the future, betting that lower tax rates will
arrive, perhaps in 2018, wealth managers told Reuters.
"Everyone wants to talk about deferring income," said Mark
Copeland, senior partner at Signature Estate & Investment
Advisors LLC in Newport Beach, California.
The U.S. stock market has also rallied since Trump's
election victory in November, partly on hopes for lower
corporate tax rates.
“We are starting to prepare clients for potentially lower
taxes in 2018," said Julia Carlson, chief executive and at
Financial Freedom Wealth Management Group LLC in Oregon.
Trump promised to cut taxes as far back as September 2015
in a four-page plan and reiterated those promises in a two-page
"Contract with the American Voter" before last November's
election and again in a one-page document in April, but
Republicans in Congress remain divided on tax reform.
The delay to tax payments could help to explain why tax
receipts this fiscal year are coming in more slowly than
projected, said tax experts and the Congressional Budget Office
(CBO), an arm of Congress.
"Taxpayers may have shifted more income than projected ...
to later years, expecting legislation to reduce tax rates to be
enacted this year," the CBO said in a monthly report on
The weaker tax revenues this year have forced the U.S.
Treasury to borrow more money than expected to cover the federal
budget deficit and that is putting the government on track to
hit its legal debt limit sooner than expected, experts said.
The U.S. government has a legal limit on how much it can
borrow, currently set at about $19.8 trillion and the limit can
only be increased by a vote of Congress.
The need to raise the debt limit usually creates partisan
debate in Washington. Conservative Republicans like to use the
debt limit issue as leverage to demand cuts in spending but
Democrats and moderate Republicans usually oppose such
ultimatums on the grounds that the borrowings are used to fund
spending approved previously by Congress.
This year, with Trump's legislative agenda stalled and
Congress preoccupied by Trump's firing of former FBI director
James Comey, the House Republicans known as the House Freedom
Caucus along with outside conservative groups are again
demanding spending cuts for support to raise the debt limit.
In 2011 the failure to raise the debt limit in a timely way
and the possibility that the U.S. government might default on
its obligations led to the U.S. losing its prized triple-A
credit rating from Standard & Poor's.
Since mid-March the U.S. Treasury has been using emergency
funding powers to postpone hitting the debt limit and those
measures had been expected to last until about October, but
lower tax receipts so far this year may mean the debt limit will
be hit sooner-than-expected.
Treasury Secretary Steven Mnuchin urged Congress last month
to raise the debt ceiling before lawmakers break for a long
August summer recess, a call echoed last week by House
Democratic leader Nancy Pelosi.
(Additional reporting by Ginger Gibson; Editing by Kevin
Drawbaugh and Clive McKeef)