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Congressional leaders, White House give spending caps talks another try

Fall government shutdown looms if both sides can’t agree on a deal

Senate Appropriations Chairman Richard C. Shelby, center right, here with ranking member Patrick J. Leahy, says both sides are closer to a deal on spending caps than they have been to date. (Caroline Brehman/CQ Roll Call)
Senate Appropriations Chairman Richard C. Shelby, center right, here with ranking member Patrick J. Leahy, says both sides are closer to a deal on spending caps than they have been to date. (Caroline Brehman/CQ Roll Call)

White House officials plan to meet with congressional leaders Wednesday — for the second time in as many months — to reach a deal on spending limits that would prevent another government shutdown this fall.

The first meeting, on May 21, produced some initial hopes that a bipartisan deal could be reached relatively quickly, avoiding a breakdown in the appropriations process when the new fiscal year begins Oct. 1.

But that was before Speaker Nancy Pelosi accused President Donald Trump of engaging in a “cover-up” relating to Russia’s interference in the 2016 election. It was also just before Trump stormed out of an Oval Office meeting with Democratic leaders and labeled the California Democrat “Nervous Nancy” as she fended off calls from within her party to begin impeachment proceedings.

“It did regress,” Senate Minority Leader Charles E. Schumer told reporters Tuesday in recounting the past month’s attempts at a spending caps deal, which included Treasury Secretary Steven Mnuchin, acting White House Chief of Staff Mick Mulvaney and acting White House budget director Russell Vought. “After we were getting close, President Trump pulled them back, and they said we can’t meet anymore,” Schumer said.

Starting Wednesday, both sides appear ready to give the talks another chance. Congressional leaders of both parties, along with top appropriators of both chambers and parties, will sit down again with Trump’s team at the Capitol.

“I hope we can get some kind of caps agreement,” Senate Majority Leader Mitch McConnell told reporters Tuesday. “It makes for an orderly process to fund the government.”


Where they stand

Senate Appropriations Chairman Richard C. Shelby said the meeting Wednesday is a follow up to a conversation he had with Pelosi on Friday. Mnuchin had earlier asked the Alabama Republican where Pelosi was on a deal.

“The answer was we didn’t know, and that’s why the meeting is tomorrow,” Shelby said.

But in the conversation Friday, Shelby said, Pelosi said she wants a deal.

“Of course, that’s in the abstract,” he said. “Now … we’re going to sit down and talk about where we are specifically.”

Shelby said he discussed the caps with Schumer and Senate Appropriations ranking member Patrick J. Leahy on Tuesday, and they are closer to a deal than they have been to date.

“It’s positive, and the atmosphere is good now,” he said. “The environment is very positive between us.”

The group is attempting to avert a trifecta of adverse consequences for the U.S. economy and critical government services: another lengthy shutdown after the current fiscal year ends Sept. 30; default on U.S. financial obligations, which could occur around the same time; and automatic cuts that could slice 10 percent on average from federal agency budgets after the first session of the 116th Congress ends.

Since the May 21 meeting, top Democrats and Trump have been increasingly at odds on a variety of issues, and Democratic leaders have questioned the White House’s willingness to cut deals.

The main issue in the spending talks has been how much to increase nondefense appropriations accounts above the tight limits mandated for fiscal years 2020 and 2021 under a deficit reduction law enacted in 2011. Recently, senior lawmakers in both parties have signaled a willingness to narrow their deliberations to a one-year deal, despite the political inconvenience of having to come back next year and do it all over again during an election cycle.

The two parties are more in lockstep on defense funding for fiscal 2020, though House Democrats are pitching a 2.4 percent boost above the current year while Trump and senior Republicans want a 5 percent increase. On nondefense, however, Trump wants to adhere to the cuts scheduled under current law, while House Democrats have written their spending bills at 5.7 percent above fiscal 2019 comparable levels. That figure grows to 7 percent when add-ons House Democrats have included above the regular caps, such as 2020 census funds, are accounted for.

Shelby said he expects negotiators on Wednesday to “get close, if not close the deal where we can move forward on appropriations bills, at least to make a significant step.” He wants caps talks to conclude so he knows how much money he and Leahy will have to dole out among their 12 Appropriations subcommittees for fiscal 2020.

From the archives: David Hawkings’ whiteboard — what is the debt ceiling?

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Meeting in the middle

Senate Republicans have been urging Trump to be flexible in the talks, stressing the impact on the Pentagon if the scheduled cuts are allowed to take effect.

“You cannot let these caps go back into effect, that undercuts everything the president has tried to achieve in rebuilding the military,” said South Carolina Sen. Lindsey Graham, a Trump confidante who frequently golfs with the president. He said he’s spoken to Trump and told him to “be reasonable in the process,” including to back off his border wall funding demands.

“That’s just not going to happen,” Graham said. “So to me the goal is to make sure sequestration never kicks back in because that not only hurts nondefense programs, it destroys his effort to rebuild the military.”

Schumer said Tuesday he planned to push for “robust” funding levels, and also said he’d make a pitch for election security funds to combat foreign interference.

The statutory debt limit is tied up in the discussions both because of the timing — independent forecasts say Treasury will run out of borrowing room sometime in late September or early October, right when Trump needs to sign spending bills or a continuing resolution to avoid a shutdown — and because Democrats view it as leverage.

Pelosi said last week that Democrats won’t support breaking out the debt limit for a separate vote unless a spending caps deal is reached in advance or as part of the same package. The 2018 caps deal also contained a “suspension” of the debt limit, effectively waiving it, until March 2 of this year although Treasury has several more months of wiggle room because of accounting moves.

Kellie Mejdrich contributed to this report.

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