Treasury Secretary Steven Mnuchin is urging Congress to raise the debt ceiling before splitting for summer break, warning Wednesday that there may be a “need” to do that before the August recess amid stalled negotiations on a broader budget deal.
Mnuchin was among President Donald Trump’s budget negotiators who met with Republican leaders at the Capitol Wednesday to try and wriggle out of a stalemate with Democrats ahead of a series of key fiscal deadlines. Attendees said afterward that forging a new two-year budget deal will be up to Mnuchin and Speaker Nancy Pelosi (D-Calif.), who did not attend the meeting but has been in contact with the Treasury secretary this week.
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Congressional leaders are hoping to lift the debt ceiling, which could be breached in mid-September, as part of the budget talks. But the stalled spending negotiations have raised the prospect of increasing the debt limit separately from efforts to fund the government past September and avoid automatic budget cuts known as sequestration.
“Everybody knows that there’s been some outside effort talking about the debt ceiling and that is something we are having discussions about … and potentially the need to do something before everybody leaves,” Mnuchin told reporters after meeting with GOP leaders on Wednesday. Asked if he wants action before the August recess, he replied: “It would be my preference to see them pass something.”
GOP leaders are still holding out hope of cutting a budget deal and attaching the debt ceiling to the package, which would make it far easier to pass. Considering the debt ceiling on its own, an unpalatable vote for both fiscal conservatives and liberals who dislike Trump, is a “last resort,” said Senate Majority Whip John Thune (R-S.D).
Mnuchin, acting White House chief of staff Mick Mulvaney and acting Office of Management and Budget Director Russ Vought met with Senate Majority Leader Mitch McConnell (R-Ky.) and House Minority Leader Kevin McCarthy (R-Calif.) on Wednesday afternoon in McConnell’s office. McConnell called it a “very good discussion” but there were no apparent signs of a breakthrough as Democrats push for more domestic spending than the Trump administration prefers.
“Secretary Mnuchin is discussing the matter with the speaker and that’s where it goes next,” McConnell said afterward.
The Republican-only confab came as congressional leaders are seeking a two-year budget deal to avoid stiff budget cuts, a debt ceiling breach and government shutdown this fall. GOP leaders say they want to pass that before breaking for August recess, but are mulling back-up plans on the debt ceiling if budget talks don’t pick up in the coming days.
“The best way is to get a caps deal with Democrats and let the debt ceiling ride on it,” said Thune. “It would be great to get it done before August.”
Separately, Mnuchin is set to speak again with Pelosi on Thursday by telephone about a budget deal. The two spoke Tuesday, even as Pelosi dismissed the idea of more meetings with Trump officials to revive stalled talks. A two-year budget deal from Trump’s first year expires in September, but forging a new one has proved difficult with House Democrats skeptical of the Trump administration and Vought and Mulvaney often arguing for more spending restraint .
Pelosi and Senate Minority Leader Chuck Schumer (D-N.Y.) have sought increases in domestic spending to go along with the bumps in defense spending that Republicans prefer. The administration has rejected those entreaties so far and is arguing instead for a year-long spending freeze, though many Senate Republicans say that’s nearly as bad as the automatic budget cuts known as sequestration.
Heather Caygle contributed to this report.