Treasury Secretary Steven Mnuchin said Monday that White House and congressional leaders are “getting closer” to a deal that would raise austere spending caps as well as the statutory debt ceiling.

Mnuchin told reporters at a briefing on cryptocurrency regulation that he planned to speak with House Speaker Nancy Pelosi, D-Calif., later Monday. The two have been having regular conversations since last week, including a Saturday phone call.

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“There is a preference on both parties to the extent we can agree on the debt ceiling and a budget deal, that, that is the first choice. And I think that we’re getting closer,” Mnuchin said.

But he stressed the debt ceiling is the more pressing priority. If the $22 trillion limit isn’t raised or simply suspended, as it’s been in recent years, Treasury wouldn’t be able to meet all of its obligations, including things like payments to bondholders, military salaries and Social Security benefits.

Last week Treasury updated its guidance for when cash on hand and various accounting tricks run out: as early as the first week of September, before lawmakers return from the August recess.

“I’m very hopeful we can come to an agreement quickly,” Mnuchin said. “But having said that, if for whatever reason we can’t agree on all these issues before they leave, I would either expect them to stick around or raise the debt ceiling.”

Mnuchin emphasized negotiations on the debt ceiling were a “team effort” including acting White House Chief of Staff Mick Mulvaney and acting budget director Russell Vought and orchestrated by President Donald Trump. Mnuchin said he met with Trump earlier Monday to discuss the talks and that he’s been having “daily” conversations with the president.

Mnuchin said he also spoke with House Minority Leader Kevin McCarthy, R-Calif., over the weekend.

The preferred course of action by both parties is a two-year deal on spending caps, Mnuchin said, rather than the one-year stopgap measure the administration has floated as a fallback. He said Trump also “very much cares” about veterans health care spending, which Pelosi specifically singled out in a weekend letter to Mnuchin as something that should be granted an exemption from nondefense caps.

“The defense versus nondefense tends at times to be viewed as a Republican versus Democrat issue; it’s not,” Mnuchin said. “Let me be clear: The Republicans all care very much about nondefense as well, and we will make sure there’s enough money to support the military and what we need to do with the military, the VA and everyone else.”

Mnuchin also stressed that offsets should be part of the discussion in exchange for higher spending caps. “There’s typically offsets that have been negotiated as part of these deals, that’s been done every single time,” he said.

Lawmakers offset the cost of two-year budget deals in 2013, 2015 and 2018, though the measure enacted last year was only partially offset.

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