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White House, Hill leaders unable to reach spending deal Tuesday

“Deals like this take time,” House Minority Leader Kevin McCarthy says

Senate Majority Leader Mitch McConnell and Minority Leader Charles E. Schumer agree that spending caps and debt limit legislation will go on the same bill. (Tom Williams/CQ Roll Call)
Senate Majority Leader Mitch McConnell and Minority Leader Charles E. Schumer agree that spending caps and debt limit legislation will go on the same bill. (Tom Williams/CQ Roll Call)

Negotiators were unable to reach an agreement on spending caps and the debt limit Tuesday, hours after a two-year deal seemed possible.

“Deals like this take time,” House Minority Leader Kevin McCarthy said after leaving an afternoon meeting between congressional leaders and administration officials.

Senate Minority Leader Charles E. Schumer said one of the biggest questions remaining was how to fund the “needs of the middle class on the domestic side.”

The developments came after Senate Majority Leader Mitch McConnell said a two-year budget deal to raise spending limits and possibly the debt ceiling could be reached as early as Tuesday.

If leaders had struck an agreement on the same day talks began, it would have broken with recent history. Two-year budget deals have typically been highly contentious affairs, requiring months of negotiation.

Congressional leaders and administration officials are likely to meet again soon to continue discussing spending levels and the debt limit, but that meeting won’t take place Tuesday, according to a Democratic aide.

McConnell’s statement early Tuesday afternoon came after a closed-door, two-hour meeting between top White House officials and the top four congressional leaders of both parties.

“The agreement would be a two-year caps deal, which would allow us to go forward with some semblance, at least, of a regular appropriations process,” McConnell, a Kentucky Republican, told reporters.

Action on the debt limit, which was reinstated in March, would also likely be part of any deal, McConnell said.

Schumer didn’t want to put a similar timetable on the negotiations as his GOP counterpart had indicated. “There are still some significant issues outstanding, particularly the domestic spending side issues,” the New York Democrat said earlier Tuesday. “But we’re having good discussions.”

If no deal is reached, spending limits imposed under a 2011 deficit reduction law would require cutting discretionary spending by about 10 percent, or $125 billion, in the fiscal year that begins Oct. 1. In fiscal 2021, the final year of the automatic reductions — known as a sequester — spending caps would rise only 2 percent above the 2020 lows.

House Budget Chairman John Yarmuth said Tuesday the White House has “been under a lot of pressure” from Senate GOP leaders to agree to a caps deal. The Kentucky Democrat expects the deal will “resemble” the fiscal 2020 spending limits the House is operating under — $733 billion for defense and $639 billion for nondefense, including Overseas Contingency Operations funds.

Yarmuth said he thinks Senate Republicans are comfortable at least with $733 billion for defense, though the Trump administration is seeking $750 billion.

In addition to McConnell, Schumer, McCarthy and Speaker Nancy Pelosi, the group of officials meeting Tuesday included Treasury Secretary Steven Mnuchin, acting White House Chief of Staff Mick Mulvaney and acting Office of Management and Budget Director Russell Vought.

“Everybody’s looking to get a two-year agreement. We had progress today, and we’ll continue going forward,” McCarthy told reporters after the group met earlier Tuesday.

Negotiators also have to resolve how to handle the debt limit, which was reinstated March 2 but which Congress may not have to address until the fall because of tax revenue inflows and accounting tricks Treasury can employ.

Democrats have pressed to attach debt limit legislation to a spending caps deal, but the White House has sought to keep the two issues separate.

For now, it appears McConnell and Schumer agree that spending caps and debt limit legislation would go on the same bill.

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