Nancy Pelosi-Steven Mnuchin talks key to raising the debt ceiling and finding a budget deal

Posted at 7:38 AM, Jul 15, 2019
and last updated 2019-07-15 15:39:04-04

There’s a new urgency — and the equivalent of an ongoing negotiating sprint — in the effort to raise the debt ceiling and reach a budget agreement, and it all comes down to two people.

It’s the speaker of the US House of Representatives and the Treasury secretary who hold the keys to what happens next. The two spoke five times in six days, and by several accounts, made a good deal of progress. But the gap still hasn’t totally closed, and the clock is ticking.

Bottom line: A compressed timetable and negotiations that haven’t yet expanded to all the parties who need sign off aren’t exactly a harbinger of future success. But the Nancy Pelosi-Steve Mnuchin talks are real, and the effort to find some kind of agreement has been moving apace for several days, sources say, but a final agreement is still a reach at this point. Keep an eye on short-term options — some of which have already been floated by the two sides — to start creeping into the picture over the next few days.

To be clear, the short-term options may be out there, but make no mistake, there is a genuine effort to strike a deal, and strike it this week, people involved say.

The clock

The House is scheduled to be in session for a grand total of eight more days before the August recess. The chamber departs on July 26. That is not an awful lot of time to mess around.

Is it possible recess could be pushed back a week, which would line it up with the Senate? Sure, but aides, at least at this point, have made clear there’s limited desire to do that.

To watch Monday: Pelosi and Mnuchin agreed in a call Saturday evening to speak again Monday. What happens on that call will likely dictate the course of this week in terms of the negotiations.

Mnuchin told reporters Monday that the talks had been “productive” and said that he’s been talking with the President daily about the negotiations.

“Congress has the right to limit spending, but once we agree to spend money, we have to pay for it and the credit of the US government is of the utmost importance,” Mnuchin said. “So the debt ceiling has to be raised.”

He added that he wants a deal done before Congress leaves for August recess.

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

The dueling letters

On Friday, Mnuchin sent a letter to Pelosi outlining the dire projectionthat in at least some of the scenarios modeled by Treasury, the US would run out of money by the beginning of September. He officially requested Congress raise the debt ceiling before the August recess.

On Saturday night, Pelosi sent a letter to Mnuchin saying that while there was agreement on the need to address the debt limit, a spending agreement must also be reached “as soon as possible.” Pelosi outlined her position that more money must be added to the domestic side of the agreement to finance a 2018 veterans care law.

Neither of these letters were a surprise. Both of the recipients knew they were coming and they were, to some degree, choreographed to take public key components of the negotiations that will need support from the administration and Congress.

Often times when elements of private talks are moved into the public sphere via a publicly released letter, it’s done to jam or shame the other side. This, according to multiple people involved, was absolutely not the case here. This was a joint back and forth.

The Mnuchin factor

It’s tough to overstate the role the Treasury secretary has played in getting negotiations back on track, according to multiple people involved, from both sides of the aisle.

He has become the public face of the talks for the administration; he has become the private voice on Capitol Hill for the talks. It is, people involved say, exactly what congressional Republicans wanted, and Senate Majority Leader Mitch McConnell requested. And it is exactly what congressional Democrats — who publicly castigate President Donald Trump’s other top negotiators, acting Chief of Staff Mick Mulvaney and acting Office of Management and Budget director Russ Vought, every chance they can get — want at this point.

“Everyone just tenses up when they start talking,” one person in the room told me of the two Trump deputies.

Mulvaney and Vought, however, do represent powerful voices in the White House urging fiscal restraint. Their preferred path to that is on cuts to the domestic side of the ledger. That’s not a recipe for a deal — something lawmakers on both sides acknowledge — but it’s a dynamic that could re-emerge before everything is said and done.

Mnuchin, on the other hand, has been described in his talks with lawmakers as even keel and willing to listen, firm in the administration’s positions but not dismissive of lawmakers, or, importantly, their staff.

Where does that lead? There’s no deal yet, and one of the primary concerns is that while Mnuchin has been deputized to lead the current talks, he doesn’t necessarily speak for the President. Administration officials scoff at that, noting that each time he speaks with Pelosi he reports back to the White House, and he hasn’t made any promises or laid out any proposals that didn’t have sign off.

“We’re operating on his word right now,” one Democrat involved said.

So far, it’s recipe that has led to progress. But negotiating toward an end game isn’t necessarily the hard part. It’s the end game that is. And that’s where both sides want to end up this week.

The details

The topline issue has long been the same — Democrats want parity between the spending increases for domestic side, which are Democratic priorities, and the defense side, which Republicans covet. They are closer to that topline agreement than they’ve been to this point, but there are also back-end issues here that need to be solved, including but not limited to locking in mechanisms to pay for certain increases to ensure that parity, and technical details related to suspending or delaying the budget caps that would lead to $126 billion in spending cuts come January.

In short, there’s a lot of technical work to do to finalize an agreement, even if it just seems based on topline numbers. That work is being done in earnest, and was continued over the weekend, according to several accounts.