Pelosi and Mnuchin Push Forward on Debt Limit With a Budget Deal
Mnuchin Says He Wants Deal With Congress on Debt Limit, Budget
(Bloomberg) -- Treasury Secretary Steven Mnuchin and House Speaker Nancy Pelosi are hashing out details of a debt limit deal that both sides say should include an agreement on a two-year budget deal.
“To the extent we can agree on a debt ceiling and budget deal, that is the first choice,” Mnuchin told reporters on Monday. “I think we’re very close to a deal but as you know these deals are very complicated.”
Pelosi and Mnuchin spoke by telephone on Monday night and agreed to talk again on Tuesday, according to a Democratic aide. The call follows a series of conversations between the two leaders representing the priorities of House Democrats and the While House.
Mnuchin’s discussions with the speaker took on increased urgency last week when the Treasury accelerated its estimate for when the U.S. will run out of money to meet payment obligations. He said under one of the Treasury Department’s scenarios, the U.S. was at risk of default in early September -- before lawmakers return from their summer recess
Mnuchin added that while he’s “hopeful” a deal on both issues can be reached at the same time, Congress shouldn’t leave town as planned at the end of the month without increasing the U.S. borrowing authority, even if there’s no agreement on spending levels for the next two fiscal years.
“I would either expect them to stick around or raise the debt ceiling” without a budget deal, Mnuchin said.
The White House and congressional leaders have discussed a short-term debt limit increase if budget talks drag on into September, but lawmakers and officials are divided on the wisdom of that idea.
‘Bigger Opportunity’
The deadline to raise the debt limit is an estimate that depends on tax revenue. While congressional leaders would like to include an agreement on budget caps, the two issues don’t necessarily have to be voted on at the same time.
If Republicans and Democrats don’t agree on the overall level of defense and non-defense spending they will have to pass a stop-gap measure to fund the government when the new fiscal year begins Oct. 1. Even with a short-term spending bill, they will still need to lift the budget caps that under current law would automatically slash $126 billion in government funds at the end of the calendar year -- which both parties want to avoid.
Democrat and Republican congressional leaders have been pushing to include the spending deal in the debt limit negotiation, rejecting the White House’s initial offer to extend current levels of government spending to next year.
Missouri Senator Roy Blunt, the Republican chairman of the Labor, Health, and Human Services Subcommittee, said Monday that Pelosi and Senate Majority Leader Mitch McConnell still back a broader deal.
“I’m hopeful the White House understands just how much simpler it would be to solve their debt ceiling problem if they would create a bigger opportunity for members to solve other problems at the same time,” Blunt said. “This could be a great package.”
A Saturday statement from Pelosi’s office highlighted the need to include funding for veterans’ health care as part of the negotiation. Pelosi told reporters that the veterans funding is the largest obstacle to an agreement in dollar terms.
Mnuchin on Monday acknowledged Pelosi’s request and said Republicans care about the issue as well. He said, however, that past deals have included cuts to mandatory spending to offset the additional money for discretionary programs. The issue of so-called offsets could prove a major hurdle to the talks even if a top-line spending level is agreed upon.
It negotiators can’t come to an agreement on the budget side of the deal this month, all parties have sought to reassure investors that Congress will act on the debt limit before the U.S. risks missing payments.
“I expect that the debt ceiling will be raised,” Mnuchin said.
--With assistance from Nancy Ognanovich and Erik Wasson.
To contact the reporters on this story: Josh Wingrove in Ottawa at jwingrove4@bloomberg.net;Erik Wasson in Washington at ewasson@bloomberg.net
To contact the editors responsible for this story: Alex Wayne at awayne3@bloomberg.net, John Harney, Anna Edgerton
©2019 Bloomberg L.P.