The White House is urging Congress to reach a budget deal and increase the debt ceiling before the August recess, based on recent projections that the Treasury Department is running out of funds faster than previously forecasted.
Treasury Secretary Steven Mnuchin met with Republican leaders Wednesday and spoke with House Speaker Nancy Pelosi (D-CA) this week to try to forge an agreement. White House officials say the debt ceiling must be raised by early September to ensure that Treasury can pay the government’s bills.
With government funding running out at the end of September, both the White House and congressional Democrats are also eager to raise the budget caps that will cause strict spending cuts in the fall. In early 2018, President Trump cut a deal with Democrats to raise the caps in 2018 and 2019 by nearly $300 billion but the caps in place for 2020 and 2021 remain at the levels enacted in the Budget Control Act of 2011. Unless Congress acts, sequester would result in $71 billion in defense spending cuts and $55 billion in domestic spending cuts.
Budget negotiations, however, have stalled. Pelosi and Senate Minority Leader Charles Schumer (D-NY) have sought increases in domestic spending to go along with the additional defense spending that the White House has demanded. Pelosi’s relationships with administration officials is strained, and earlier this week she told reporters, “I don’t see any reason to have a meeting. They know where we are. We’ve met, we’ve met, we’ve met.”
Key negotiators say the ideal situation is to get a two-year budget deal to avoid the spending cuts and any possibility of a government shutdown in the fall, and tack on the debt ceiling increase as well.
“The best way is to get a caps deal with Democrats and let the debt ceiling ride on it,” said Senate Majority Whip John Thune (R-SD). “It would be great to get it done before August.”