Mnuchin Defends Debt-Limit, Budget Deal to Skeptical Republicans

(Bloomberg) -- Treasury Secretary Steven Mnuchin faced skeptical Republicans on Capitol Hill as he sought to convince them his deal to raise the debt limit and increase spending is the best the GOP could do in negotiations with House Speaker Nancy Pelosi.

Mnuchin sought to reassure Republican senators at their weekly lunch that President Donald Trump will, in fact, sign the agreement if Congress passes it, even though some of the president’s closest allies in Congress criticized it.

“The president absolutely supports it,” Mnuchin told reporters. “I am sure it will pass.”

Top two Senate Republicans Mitch McConnell and John Thune, as well as Pelosi and second-ranking House Republican Steve Scalise, sought to rally their members to back the plan. McConnell said it will head off “unnecessary drama” in funding the government.

“I make no apologies for this two-year caps deal,” McConnell told reporters. “When you have divided government both sides have a seat at the table.” He said he’s confident the Senate will have enough votes to pass it.

Thune said, “It probably won’t get all of our members but I think it will get a lot of them.“

But Representative Mark Meadows, the North Carolina Republican who chairs the Freedom Caucus, a House group that strongly supports Trump, said he won’t vote for the deal.

Senator John Kennedy, a Louisiana Republican, said it’s doubtful he will back it but he hasn’t made a final decision. He said the U.S. has $22 trillion in debt -- “that’s 12 zeroes.”

“I have a lot of questions,” Kennedy said. “Based on where I am right now, this deal may taste like pumpkin pie but I’m not sold yet.”

‘Support This Deal’

Trump Tuesday evening urged reticent Republicans to support the agreement.

“Budget Deal gives great victories to our Military and Vets, keeps out Democrat poison pill riders. Republicans and Democrats in Congress need to act ASAP and support this deal,” Trump said in a tweet.

GOP leaders had been looking for an explicit endorsement from the president. Trump unexpectedly torpedoed previous bipartisan agreements negotiated on his behalf, including the 2019 spending deal Vice President Mike Pence vouched for. Trump’s reversal threw that vote into question and left much of the government without funds for 35 days. Trump also threatened to veto -- but ultimately signed -- the 2018 package of spending bills.

Leaving Tuesday’s meeting, Mnuchin said he described his discussions with Pelosi to senators and highlighted the agreement’s wins for the military. He said suspending the debt ceiling “was incredibly important.”

“We couldn’t get a deal without getting bipartisan support,” Mnuchin told reporters. “The Democrats compromised on a lot of things along the way.”

‘Caution to the Wind’

Senator James Lankford, an Oklahoma Republican, said he won’t back the deal because it leaves Congress without any spending restraints for at least two years.

He said Mnuchin is trying to deal with a short-term problem -- funding the government and paying of debts already incurred -- but Congress should do more than write a check.

“We need a second eye focused on the long term, and that’s what is missing here,” Lankford said.

At least one Democrat also was wavering. Senator Joe Manchin, a West Virginia Democrat, said he is just beginning to review the deal. He said he hasn’t decided whether he’ll vote for it, but he is alarmed by the big boost in spending.

“Jiminy Christmas! Caution to the wind on the money!” Manchin said.

Senator Mike Rounds, a South Dakota Republican, said that while the deal has shortcomings, he wants to see the boost in defense spending that it offers. He indicated he’s likely to support it, but will continue to push for fiscal restraint in other ways.

“Right now I’m very concerned about defense,” Rounds said. “My message is that we have to, in a very dangerous world, have resources for the defense of this country.”

--With assistance from Steven T. Dennis.

To contact the reporters on this story: Laura Litvan in Washington at llitvan@bloomberg.net;Erik Wasson in Washington at ewasson@bloomberg.net

To contact the editors responsible for this story: Kevin Whitelaw at kwhitelaw@bloomberg.net, Anna Edgerton

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