House Speaker Nancy Pelosi said Thursday that she would seek a fiscal grand bargain with the White House and congressional GOP leaders before adjourning for the August recess, eager to avoid high-stakes negotiations at the 11th hour that could shock the economy later this fall.
Pelosi and Republican leaders are looking to strike a multi-year deal to lift the nation’s $22 trillion debt limit and nix Congress’ stiff spending caps, which threaten billions of dollars of cuts at year’s end.
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“I am personally convinced that we should act on the caps and the debt ceiling,” Pelosi told reporters on Thursday evening, adding that it should be done “prior to recess.”
The California Democrat’s comments come after several talks with Treasury Secretary Steven Mnuchin. The two spoke just before 5 p.m. for roughly 20 minutes, and again for about 30 minutes at 7 p.m., according to a senior Democratic aide. Pelosi and Mnuchin also plan to speak again Friday morning, the aide said.
Both parties are under pressure to act swiftly to prevent roiling financial markets with yet another round of dramatic, down-to-the-wire negotiations in early September, just days after lawmakers are slated to return from their summer break.
And Capitol Hill leaders are particularly anxious to avert disaster after failing to prevent a record 35-day government shutdown to kick off the 116th Congress.
A quick deal would be a surprise after months of on-again, off-again talks between congressional leaders and the White House — including high-profile meetings with Pelosi and Senate Minority Leader Chuck Schumer, one of which resulted in President Donald Trump storming out.
The effort to reach an agreement comes after Mnuchinissued a stern warningto congressional leaders that the drop-dead date to raise the nation’s borrowing limit and avoid a default was now in mid-September. That deadline was pushed up by several weeks amid lower-than-expected tax revenue this year.
Without action on Congress’ budget caps, hundreds of billions of dollars would be slashed from domestic programs like Medicare, as well as the Pentagon.
Some Democrats have privately feared that the high-wire act of waiting until September — with just days to draft and pass legislation — would have benefited White House officials, like acting chief of staff Mick Mulvaney.
Mulvaney, who showed he was willing to risk a fiscal cliff when he served in the House, could benefit from the pressure of last-minute talks, since Democrats are unwilling to gamble with a default to try to win a better deal, some Democrats say.
Republicans, too, are eager to avoid a high-stakes fiscal battle in September, with a trade battle with China already putting Wall Street on high alert.
The basic structure of a budget deal between the two parties have long been established on Capitol Hill, where lawmakers have largely negotiated their way out of spending restrictions for a decade.
But it would require political capital from leaders of both parties: Progressives, for example, would need to accept sharp increases in Pentagon funding without any other policy concessions from Trump.
And Republicans would need to stomach drastic increases in domestic spending with no attempt to pay for it.