Democrats said Friday there are “nonstarters” in a new White House offer that includes $1.1 trillion in options to offset spending increases in a two-year agreement that would raise the budget caps and hike the debt limit.
“This is the White House’s starting point for negotiations on this aspect,” a Democratic source close to the talks told POLITICO. “They understand these levels are nonstarters for us. Talks will continue.“
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Democrats say they are reviewing the White House bid, however.
Meanwhile, President Donald Trump accused Democrats of using the debt ceiling as a “negotiating wedge“ to secure their priorities in a sweeping budget deal.
“They can’t use the debt ceiling to negotiate,” Trump said at the White House. “That’s a very sacred thing in our country, debt ceiling. We can never play with it.“
A senior Trump administration official confirmed that the White House on Thursday night proposed $574 billion in ways to counteract spending increases, in addition to $516 billion in savings that would be achieved by freezing fiscal 2021 spending levels for fiscal years 2022 and 2023.
Bloomberg first reported the offer, which includes a host of reforms that Democrats likely would never approve. It also includes a drug pricing proposal detailed in Trump’s fiscal 2020 budget request, and doesn’t propose cuts to Social Security.
Fiscal conservatives on Friday urged Trump to reject any budget agreement that doesn’t include adequate offsets or a guarantee that Democrats won’t insert “poison pills” into individual spending bills following a budget agreement.
“By rejecting even modest conditions from the White House, Speaker Pelosi seems determined to drive our nation into bankruptcy to fund her big-government agenda,” Reps. Mike Johnson (R-La.) and Jim Banks (R-Ind.) said in a statement.
“Republican negotiators from Congress and the White House cannot allow such a deal to proceed, particularly when the end result will be a Democratic-led crusade to use poison-pill spending riders to undercut the White House’s deregulatory agenda, homeland safeguards and pro-life policies,” they said.
House Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin have been locked in negotiations for days, hoping to clinch a deal by week’s end that would stave off $126 billion in automatic spending cuts and a calamitous default on the nation’s debt.
Time is running out to seal a deal, with the House expected to leave for summer break on July 26. The Treasury Department has estimated that the federal government could breach its borrowing authority before lawmakers return from recess in early September, triggering a debt default. Federal agencies are also set to run out of funding at the Sept. 30 end of the fiscal year.
Mnuchin said on Thursday that congressional leaders and the White House have “reached an agreement“ on overall spending levels in a two-year deal to raise the budget caps, in addition to settling on a two-year debt limit increase.
But the Trump administration’s demand to offset the spending increases represents a significant hurdle to finalizing a deal, with the administration seeking at least $150 billion.
The White House also wants a guarantee that Democrats won’t insert “poison pills” in spending bills. Democrats have demanded “parity,” or dollar-for-dollar increases in military and non-military spending, in addition to $22 billion in funding for veterans health care over the next two fiscal years.