Thursday, US Treasury Secretary Steven Mnuchin said that negotiators have reached an agreement on the core elements of a deal to increase the government’s borrowing cap and set a $1.3-T overall level for the agency budgets that Congress passes each year.
He told reporters that talks with House Speaker Nancy Pelosi, (D-CA), have settled on a debt limit increase that would cover 2 years. There was agreement also on spending levels.
Still to be resolved are offsetting spending cuts to help finance the deal and other “structural issues,” Secretary Mnuchin said. The Trump Administration is pressing for up to $150-B in such cuts, well above a figure that would be easy to quickly negotiate.
“The good news is we’ve reached an agreement between the administration, the House and the Senate on top line numbers for both year 1 and year 2.” “We are now discussing offsets as well as certain structural issues, and we’ve agreed as a part of that deal there would be a long-term 2-year debt ceiling increase,” he said.
At issue are 2 separate but pressing items on Washington’s must-do agenda: increasing the debt limit to avert a first ever default on US payments and acting to set overall spending limits and prevent automatic spending cuts from hitting the Pentagon and domestic agencies in January.
“Our conversations are continuing. We’ve been very firm though about a decision. If they want us to have this done by before we leave we have to come to a conclusion pretty soon,” Speaker Pelosi said.
Reaching an agreement also eliminates the possibility of a repeat government shutdown when the current budget year ends 30 September. President Trump ended up on the losing end of a record 35-day partial shutdown last December and January.
“Nobody wants a shutdown in any scenario,” said Secretary Mnuchin, who taking the lead for the administration in negotiations.
Democrats, Senate Republicans, and pro-Pentagon Republicans form the core of a powerful coalition favoring a deal. But House conservatives that comprise the core of President Trump’s base in Congress are wary of the emerging agreement and warn that President Trump may reject a deal that does not have their support. The alternative is to run the government on autopilot, a prospect that alarms the Pentagon and its allies.
“If we can get a decent number and a two-year deal and all the stability that goes with that and if we can do that now that will be more valuable than a somewhat higher number … in December,” said Representative. Mac Thornberry (TX), Top Republican on the House Armed Services Committee.
The talks have gone on for weeks but took on new urgency as deficit estimates worsened, creating an unacceptable risk of default in early to mid-September.
Secretary Mnuchin said the risk of a debt default in September is relatively low, limited to the Treasury Department’s “most conservative scenario.”
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