Pelosi Wants July Debt Limit Solution But Hurdles Still Remain
Pelosi Wants July Debt Limit Solution But Hurdles Still Remain
(Bloomberg) -- U.S. House Speaker Nancy Pelosi said Congress should act this month to raise the debt ceiling, but it’s not clear that lawmakers and the White House will strike a deal before the House is set to leave town on July 26 for a six-week recess.
Congressional leaders have increasingly acknowledged that waiting until September to allow the U.S. to borrow more money would raise the prospects of a payment default if new unofficial estimates are correct.
Republicans, Democrats and Trump administration officials have intensified their negotiations this week, and all sides say a deal will get done. The Treasury Department hasn’t provided lawmakers with an updated official estimate for how much time they have to act before a default. Lawmakers are not scheduled to be back in Washington until Sept. 9.
After speaking with Treasury Secretary Steven Mnuchin Thursday, Pelosi told reporters she’s now “convinced” that Congress should raise the U.S. debt ceiling this month. They spoke twice Thursday and agreed to speak again on Friday, according to Pelosi’s office.
The California Democrat said she still wants to tie the debt limit to a broader agreement on overall spending levels, known as budget caps, and that she and Mnuchin would continue to negotiate the details.
“I am personally convinced that we should act on the caps and the debt ceiling prior to recess,” Pelosi said. “I’m realistic.”
Avoiding Default
Senate Majority Leader Mitch McConnell, a Kentucky Republican, has also called for Congress to act quickly.
“I don’t think there’s any chance we will allow the country to default,” McConnell said Tuesday. “As to the timing, we’re going to stay in close communication with the secretary of the Treasury about when that actually must be done, and we’ll no doubt do it on a bipartisan basis.”
The Treasury has been using accounting measures to avoid a payments default since the borrowing limit snapped back into place on March 2. The department’s room to maneuver depends on tax revenue, and the Bipartisan Policy Center, an independent think tank, this week adjusted its estimate to say there is a “significant risk” of defaulting on a key payment in early September.
Lawmakers this week asked Mnuchin to provide a new official estimate backing up the independent analysis.
“There were some outside numbers about the debt ceiling and that’s something we’re having discussions about, updating the numbers and potentially the need to do something before everybody leaves,” Mnuchin told reporters Wednesday after meeting with McConnell and House Minority Leader Kevin McCarthy, a California Republican.
McCarthy on Thursday also urged the House to act on the debt ceiling before August.
House Democrats have been trying to leverage the debt ceiling bill to increase federal spending caps, and they were looking to negotiate those caps after their August recess.
That budget deal, which would cover two fiscal years, aims to avoid an automatic $126 billion cut at the end of the calendar year and -- if Democrats prevail -- add additional domestic spending above fiscal 2019 levels. Such an agreement would help the government avoid another shutdown when funding runs out Oct. 1.
If the combined debt ceiling and budget deal continues to elude lawmakers, Democrats and Republicans have begun to talk openly of a short term debt ceiling increase this month while budget talks continue.
Mnuchin last month suggested putting the government on autopilot at current spending levels for a year, but both Pelosi and congressional Republicans rejected that idea. Fifteen Republican senators sent a letter to the White House saying the armed forces would be harmed by such a plan.
Republicans and Democrats also face disagreements over whether spending increases should be wholly or partly paid for by cuts to entitlement spending or by increased fees. Similar deals in the past have had such offsets to avoid adding to yearly deficits.
House Democrats have been trying to leverage the debt ceiling bill to increase federal spending caps, and they were looking to negotiate those caps after their August recess.
If a budget caps deal is reached, Congress would then need to negotiate next year’s spending bills. The House passed 10 of 12 bills, but many are loaded with controversial policy provisions such as preventing President Donald Trump from spending money for a wall on the U.S.-Mexico border.
A dispute over border wall funding led to a 35-day partial government shutdown earlier this year.
To contact the reporter on this story: Erik Wasson in Washington at ewasson@bloomberg.net
To contact the editors responsible for this story: Joe Sobczyk at jsobczyk@bloomberg.net, Erik Wasson, Anna Edgerton
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