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McCarthy pitches monthlong debt ceiling stopgap, if deal can’t be reached

He suggested a 30-day extension to avoid default in early September, if a compromise on discretionary spending caps can’t be reached

House Minority Leader Kevin McCarthy, R-Calif., is floating a fallback plan to pass a 30-day extension of the debt limit in the absence of a broader deal before the August recess. (Bill Clark/CQ Roll Call file photo)
House Minority Leader Kevin McCarthy, R-Calif., is floating a fallback plan to pass a 30-day extension of the debt limit in the absence of a broader deal before the August recess. (Bill Clark/CQ Roll Call file photo)

The House’s top Republican suggested that lawmakers pass a 30-day extension of the debt ceiling to avoid default in early September, if Democrats and the White House can’t agree on compromise discretionary spending caps before leaving for the summer break.

“We should not leave for August without dealing with that. And I would say if we can’t get this done, we should do a 30-day [stopgap],” McCarthy told reporters Tuesday. He also said lawmakers ought to stay in town a few days past July 26, when House lawmakers are currently scheduled to leave town, if necessary. The Senate is slated to be in session for an extra week.

[Mnuchin: Parties moving closer on debt limit, spending caps]

It wasn’t immediately clear what the mechanics of a 30-day bill would look like, such as waiving the debt limit until a date certain in late September or some other construct.

Regardless, House Speaker Nancy Pelosi, D-Calif., has repeatedly made clear that she won’t support action on the debt limit without also addressing the tight spending caps returning in fiscal 2020 and 2021 under current law.

[Road ahead: Pressure rising for debt limit deal]

“We are not interested in a temporary increase in the debt limit,” House Majority Leader Steny H. Hoyer, D-Md., said Tuesday.

That view is shared broadly within the caucus, as it provides Democrats with leverage to enact the higher nondefense caps that the White House has opposed thus far. “Some are passionate about a debt deal. A caps deal is essential,” House Appropriations Chairwoman Nita M. Lowey, D-N.Y., said Tuesday.

McCarthy stressed that the strong preference on his side was also to do a spending caps deal.

“I don’t think that’s ideal,” McCarthy said of his fallback short-term option. “I’d rather get a cap agreement and a debt ceiling agreement before we leave In July. And I think we are very close to making that happen.”

Hoyer said he’s hopeful a budget caps agreement can be reached “very soon” and that if one is reached in the next few days that it will be on the floor next week.

Treasury Secretary Steven Mnuchin on Monday also said the two parties were close to a deal, though there haven’t been any public signs of progress on spending caps. Pelosi reiterated Tuesday her view that in addition to “parity” for nondefense and defense spending increases, Department of Veterans Affairs health care funds should be carved out and added on top of the rest.

“The VA… wasn’t part of the base and so we’re saying let’s make an accommodation for some of that VA money because it shouldn’t compete with other VA programs,” Pelosi said. “I think some of it should be above the cap and that’s what the discussion is, and we’ll see.”

The White House says the veterans funds are needed but should be accommodated within the regular nondefense budget limits.

Pelosi declined to say if the House would come back from its August recess earlier than Sept. 9 if an agreement can’t be reached before lawmakers leave town next Friday. “I don’t speculate on what might or might not happen,” she said.

House Budget Chairman John Yarmuth told reporters he isn’t particularly worried about what would happen to the stock market or the economy if Congress leaves Washington for its August recess without a deal on the debt limit.

“Do I have concerns? Yes. Am I seriously concerned? No, because I think this market has proven time and time again that it’s willing to put up with a lot of uncertainty,” said the Kentucky Democrat. “I don’t think the market thinks that there’s ever a possibility of default.”

In the absence of a comprehensive deal on caps and the debt ceiling, a short-term extension of the debt limit would be the “safer” option, Yarmuth said.

Meanwhile because of potential opposition from some Democrats on the party’s left flank to higher defense spending, votes on the GOP side are likely to be necessary.

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Conservatives’ conditions

The House Republican Study Committee is an important bloc of 145 members who tend to have hawkish views on spending. The group’s leadership took a position Tuesday outlining conditions for support of a debt ceiling and caps deal which could be difficult for Democrats to accept.

Conditions include fully offsetting the spending cap increases and the inclusion of long-term “spending control” measures. They also said they’d oppose a deal that “irresponsibly swells the size of the federal discretionary budget,” or the portion that is subject to annual appropriations.

The RSC members specifically warned the 2018 budget deal (PL 115-123) “cannot happen again,” criticizing lawmakers’ decision to only offset a fraction of the $358 billion cost over a decade. That was in contrast to the three previous two-year deals, which all raised spending above budget caps established in the 2011 deficit reduction law, but “were paid for and contained mandatory and discretionary spending reductions,” the group’s letter said.

Rep. Mike Johnson, R-La., the RSC chairman, said his group’s terms were “reasonable” and that the White House “largely agrees.”

“I think we’re just deeply concerned and a growing number of members in the Congress are concerned there will be no yield or stop signs for the Congress on spending in the future,” Johnson said.

Positions taken by the RSC’s Steering Committee, which released the letter Tuesday, don’t necessarily bind the entire 145-member bloc to vote a certain way, however.

Lindsey McPherson, Jennifer Shutt, Niels Lesniewski and David Lerman contributed to this report.

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