Treasury Secretary Steven Mnuchin on Thursday said that he was making progress in negotiating a budget deal with Democrats but that significant provisions remained unresolved, showing the frenetic state-of-play as the White House and Congress near a difficult deadline.
And some lawmakers expressed concern that a rift among White House advisers could imperil the deal at a final stage of negotiations.
Mnuchin, in an interview on CNBC from France, said negotiators had agreed to “top line” spending numbers for 2020 and 2021. These numbers show the total amount of discretionary, or congressionally approved, spending that can be authorized each year. Lawmakers must still pass individual spending bills, but agreeing on these top-line numbers allows them to remove spending caps that were put in place during the Obama administration.
“I think everybody is in agreement that we won’t do anything that puts the U.S. government at risk in terms of our issue of defaulting,” Mnuchin told CNBC. “I think that nobody wants a shutdown in any scenario. So I don’t think the market should be concerned.”
Mnuchin also said he had agreed with negotiators to a two-year debt limit increase, which he believes is crucial because he has alleged the Treasury Department could run out of money as soon as early September if Congress doesn’t act. If the debt ceiling isn’t raised by then, it could make it very difficult for the Treasury Department to pay all its bills.
“I’ve discussed that with the leadership of both the House and the Senate,” Mnuchin said. “That’s why I’ve encouraged them to raise the debt ceiling before they leave” for recess on July 26.
Democrats confirmed Mnuchin’s assessment of the state of play, but both sides said a major issue remained unresolved: Spending cuts or money-raising measures that the administration wants to offset some of the new increases proposed in the budget talks. The “top line” numbers that negotiators have agreed to represent spending increases from the current budget, and the White House is seeking roughly $150 billion in other cuts to offset the increases.
Late Thursday, the White House sent a list of around $575 billion in potential cuts to House Speaker Nancy Pelosi (D-Calif.), according to a senior administration official who spoke on the condition of anonymity to discuss ongoing talks. Democrats have not agreed to any of the proposals, and a Democratic official close to the talks described the list as a White House “starting point,” adding: “They understand these levels are nonstarters for us. Talks will continue.” Democrats have said they could identify more than $60 billion in cost-savings by trimming spending in certain areas and raising fees, but that getting too much higher than that could be problematic.
Importantly, Trump has not yet signed off on any agreement, multiple lawmakers said, and a deal wouldn’t be complete until he issued his approval.
Also complicating matters, Mnuchin has been seen by Democrats as more amenable to compromise and hopeful for a deal. But White House acting chief of staff Mick Mulvaney and White House acting budget director Russell Vought are trying to force concessions that many lawmakers won’t accept.
“You always worry, because Mulvaney is such a hardliner on these issues,” Senate Minority Leader Charles E. Schumer said. “But we’ll see.”
Senate Appropriations Committee Chairman Richard C. Shelby (R-Ala.) said there was an “agreement in principle” but it still needed final approval from Trump.
“They got to get the president on board," he said. "You know that.”
Shelby also said he was hopeful the president would heed the advice of Mnuchin -- not Mulvaney -- during the talks, as he thought Mnuchin was working to bridge differences between all sides.
Some congressional leaders have said they need to have a resolution by Friday to give them enough time to vote on any package next week, but it was unclear if that goal could be met or if the talks would spill into the weekend or beyond.
“Our conversations are continuing,” Pelosi said Thursday. “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.”
Later, when asked about where things stood, Pelosi simply responded, “It’s alive,” referring to the status of talks.
The differences could force both sides to make tough decisions very quickly.
If Trump decides to block any deal that doesn’t include offsets, lawmakers could depart at the end of next week for a lengthy recess and leave the debt ceiling issue unresolved heading into September. But if Democrats in the House refuse to sign off on a big package of spending offsets, then they could be forced to decide whether to pass a short-term debt ceiling increase to avoid a financial crisis in just a few months.
One item on the administration’s offset list involves $115 billion in drug pricing changes, although it was unclear what changes were being envisioned. The administration also proposed extending Obama-era spending caps that would otherwise disappear after 2021 for an additional two years.
Rachael Bade and Mike DeBonis contributed to this report.