The White House is pushing to raise the debt ceiling while attempting to exploit divisions among House Democrats, who have struggled to reach a consensus on spending priorities, according to a person familiar with the process.
House Speaker Nancy Pelosi and Senate Majority Leader Mitch McConnell had agreed to start conversations over how to navigate the triple threat of fiscal deadlines looming this fall: raising the debt ceiling, funding the government and avoiding the automatic spending cuts known as the sequester.
While lawmakers have been on recess the past two weeks, congressional staff from both parties met with the Trump administration on the path forward. But that early discussion ended without the clear contours of an agreement, according to two people familiar with the meeting. The White House is opposed to bundling the issues together and expressed that President Donald Trump will not accept another significant increase in federal spending, according to one of the people.
The Treasury Department hit the federal debt limit on March 1 and has been using so-called extraordinary measures to pay the nation's bills since then. The Congressional Budget Office estimates that those measures will last until the fall. After that, the U.S. government risks defaulting on its debts, an unprecedented act that many economists and analysts believe would unleash financial chaos.
Democrats have not yet settled on an approach to raising the debt ceiling, according to a leadership aide who declined to be named. However, many believe the most viable political option would be to attach the debt ceiling to legislation that would lift statutory caps on government spending. The aide said the administration has not communicated its preference on the debt ceiling or urgency on the matter.
Democrats are having trouble reaching a spending agreement among themselves. An attempt to bring a spending bill to the House floor before recess was thwarted by opposition from progressives who balked at the increase in defense spending. House Democrats abandoned an effort to pass a budget amid divisions over whether to account for the massive expansion of the social safety net that progressive members have championed.
"I am confident that Democrats will agree to a spending plan that boosts both defense and non defense spending," said Jim Manley, a veteran Democratic strategist. "However, looming over this whole debate is the question of whether or not the president is going to try and force another shutdown because he thinks it will help him politically."
The White House is hoping that isolating the debt ceiling as a separate issue will deprive Pelosi of a key leverage point during government funding negotiations this fall, according to a person familiar with the administration's strategy. It also wants to remove the debt ceiling as a potential source of volatility in an otherwise strong economy. Government data released this morning showed the economy grew at a 3.2 percent rate during the second quarter, beating expectations.
The administration is also open to attaching a debt limit increase to the $13.5 billion disaster relief bill currently under consideration by Congress, according to a source. Democrats have pushed for that measure to be voted on by itself, however, and would likely be loath to add another controversial provision to what is already politically fraught legislation.
"We'd prefer to do disaster relief separately and on its own merits," a Democratic aide said.