The Trump administration shot down prospects for a quick deal on spending and the debt limit Wednesday, raising new demands and accusing Speaker Nancy Pelosi of “happy talk” after she said the House could vote on a package next week.
Nevertheless, Pelosi (D-Calif.) expressed guarded optimism in a news conference Wednesday: “We would like to have something on the floor next Thursday so that we can send it in a timely fashion to the Senate.” She said that would mean reaching a deal by the end of this week.
That prompted an acrimonious response from the administration.
“Pelosi’s new timeline sounds like happy talk from the Speaker who has been absent from talks for the last three months and now is trying to create momentum after a bad couple weeks,” a senior administration official said in a statement. “The reality is, we have a way to go,” said the official, who commented on the condition of anonymity to speak freely.
The critical comments from the administration, along with fresh demands about the contours of any deal, raised chances that the House could head into its six-week summer recess at the end of next week without having acted to raise the debt limit.
Treasury Secretary Steven Mnuchin warned earlier this week that this would be a major mistake, as some administration officials say the government could run out of money to pay its bills as soon as early September. Congress will not be back in Washington until after Labor Day.
Pelosi has been negotiating directly with Mnuchin in recent days, but he departed Tuesday night for a global summit in France. Still, Mnuchin, Pelosi and Senate Minority Leader Charles E. Schumer (D-N.Y.) spoke Wednesday as they tried to bridge differences.
Mnuchin has said, however, that President Trump would need to agree to any deal, and the president has not said publicly whether he would back a compromise.
Asked Wednesday evening about the administration’s questioning of her timeline, Pelosi said: “Then we don’t have it before we leave. It’s up to them. . . . We have to have it ready by Friday night in order to meet all of our regular-order timetables, but we think it can be done.”
According to people involved in the talks, the administration is pressing for some $150 billion in specific spending cuts or money-raising measures, also known as “offsets,” to accompany spending increases, a goal that could be out of reach without slashing domestic programs that Democrats want to protect.
The administration also now wants Pelosi to agree that future spending bills will be free of divisive policy provisions on issues like immigration and abortion that are important to many liberals in the House. Such provisions, sometimes referred to as “riders,” are a tool both parties use to insert favored policies into must-pass spending bills, and since Democrats gained control of the House, they have added measures on abortion, Trump’s border wall, gun control and other issues that Republicans oppose.
Both of those demands could jeopardize chances for a deal. And they are just two of a handful of areas where agreement has yet to be reached between Pelosi and the Trump administration as time grows short.
Pelosi has been aiming for a two-year deal to raise spending levels and the debt ceiling, eliminating the risk of a default on U.S. obligations this fall and decreasing chances of a government shutdown when current spending runs out Oct. 1. Senior Republican lawmakers share those goals and have been voicing optimism.
“We will be fine because we will submerge our differences for the greater good. . . . I hear that we’re closer than we were,” Senate Appropriations Chairman Richard C. Shelby (R-Ala.) told reporters Wednesday.
But lawmakers have also expressed concerns about whether an agreement struck between Pelosi and Mnuchin would pass muster with Trump or other top officials, such as acting White House chief of staff Mick Mulvaney and acting budget director Russell Vought, who have been forceful opponents of increasing domestic spending. Any deal would involve trade-offs as Democrats push for more domestic spending, their price for the higher Pentagon spending levels sought by Trump and Republicans.
The negotiations are more complicated, though, because lawmakers are trying to solve two problems at once, seeking to modify caps on spending levels for the fiscal year that begins in October while raising the government’s borrowing limit.
The U.S. government spends almost $1 trillion more a year than it brings in through revenue, and it covers the difference by issuing debt to borrow money.
But the government can borrow only up to a level set by Congress, and a suspension of that limit — known as the debt ceiling — expired in March. The Treasury Department has been using a variety of measures to extend its ability to borrow ever since, but Mnuchin has warned he will run out of flexibility as soon as early September, making it much harder for the government to pay all of its bills. Experts have warned this could lead to a stock market crash, a spike in interest rates and a major contraction in the economy.
Seung Min Kim and Paul Kane contributed to this report.