House Speaker Nancy Pelosi said Thursday she will attempt to finalize a deal that would raise the debt ceiling in the next few weeks instead of delaying until fall, heeding dire warnings from Treasury Secretary Steven Mnuchin that the government could fall behind on its bills by early September.
Pelosi (D-Calif.) told reporters she wants to raise the debt ceiling as part of a deal that would set spending levels for the next two years. Many lawmakers on Capitol Hill had expected that a vote on
a spending and debt package wouldn’t occur until September, but Pelosi indicated for the first time Thursday that they needed to act more swiftly.
“Before recess,” she said, referring to a long August break.
Asked about the prospects for a deal, she said, “We’ll see. We’re going back and forth.”
She said that the “urgency” was being driven by Mnuchin, and added that “what we’re talking about is trying to find a solution.”
Pelosi’s comments came shortly after she spoke with Mnuchin for at least the second time this week. He has been arguing for weeks that Congress needs to move much faster than lawmakers were planning in order to ensure that Treasury has enough money to pay its bills.
As Pelosi tries to whip up momentum on Capitol Hill, top White House officials have also been scrambling to formulate their approach. Mnuchin and others met at the White House on Thursday afternoon to discuss their spending and debt ceiling strategy.
Meanwhile, the White House has told federal agencies to submit new shutdown contingency plans by the beginning of August, said two people briefed on the planning who spoke on the condition of anonymity because they weren’t authorized to discuss it.
White House officials want to avoid another chaotic shutdown if Congress doesn’t approve a funding bill by the end of September, and many agencies had been caught unprepared during the 35-day shutdown that began in December 2018.
The White House has been trying to broker a budget deal with lawmakers for more than a month, but the Trump administration and lawmakers remain far apart on how much money they want to authorize for the federal budget.
Many government functions are funded only through the end of September, and Democrats were planning to wait and vote on a debt ceiling and budget agreement all at once. A number of Republican lawmakers had favored this approach as well, as many believe it is politically treacherous to vote for a debt ceiling increase on its own.
The current budget standoff between the White House and lawmakers has been marked by distrust. White House officials have tried to cleave a debt ceiling vote away from a spending vote for weeks, but some Democratic aides have said this is a ploy to drive a government shutdown in October without also forcing a debt ceiling crisis.
The government spends roughly $900 billion more than it brings in through revenue each year, and it covers the difference by issuing debt, a way of borrowing money.
But it can issue debt only up to a certain limit set by Congress. Congress last suspended the debt limit in 2018, but that suspension expired in March. The Treasury Department has worked to delay certain payments as a way to delay falling behind on major payments, but it is projected to run out of this flexibility in either early September or at some point in October, depending on when tax payments come in.
This accelerated timeline will pose major tests for Pelosi, Senate Majority Leader Mitch McConnell (R-Ky.) and the White House as they will be forced to decide whether to make major concessions on a spending agreement in a brief window of time.
White House officials have backed away from their call earlier this year to impose major spending cuts on a range of programs, and instead have said they will approve a slight increase in spending — particularly for the military — beginning in October. But Democrats have said they want even more programs to see boosted spending levels, and the negotiators have remained billions of dollars apart for weeks.