White House pushes debt ceiling increase as Democrats split on spending

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President Donald Trump speaks to the media before boarding Marine One on the South Lawn of the White House in Washington, DC, Friday, April 26, 2019.

Andre Harrer | Bloomberg | Getty Images

The White House is pushing to raise the debt ceiling while trying to exploit divisions among House Democrats, who have struggled to reach consensus on spending priorities, according to a person familiar with the process .

House Speaker Nancy Pelosi and Senate Majority Leader Mitch McConnell had agreed to start conversations about how to deal with the triple threat of budget deadlines looming this fall: raising the ceiling debt, fund the government, and avoid automatic spending cuts known as escrow.

While lawmakers were on vacation for the past two weeks, congressional staff from both parties met with the Trump administration on the way forward. But that first discussion ended without the clear outlines of an agreement, according to two people familiar with the meeting. The White House opposes bundling the issues and has said President Donald Trump will not agree to another significant increase in federal spending, according to one of the people.

The Treasury Department hit the federal debt ceiling on March 1 and has been using so-called extraordinary measures to pay the nation’s bills ever since. The Congressional Budget Office estimates that these measures will last until the fall. After that, the US government risks defaulting on its debts, an unprecedented move that many economists and analysts believe would trigger financial chaos.

Democrats have yet to come up with an approach to raising the debt ceiling, according to an executive aide who requested anonymity. However, many believe that the most viable policy option would be to set the debt ceiling to legislation that would lift statutory ceilings on public spending. The aide said the administration had not communicated its preference on the debt ceiling or the urgency of the matter.

Democrats are struggling to reach a spending deal among themselves. An attempt to introduce a spending bill in the House before recess was thwarted by opposition from progressives who wavered over increased defense spending. House Democrats abandoned an effort to pass a budget amid divisions over whether to accommodate the massive expansion of the social safety net that progressive members have championed.

“I’m confident Democrats will accept a spending plan that will increase both defense and non-military spending,” said Jim Manley, a seasoned Democratic strategist. “However, the question of whether or not the president will try to force another shutdown because he thinks it will help him politically looms large over this whole debate.”

The White House hopes that isolating the debt ceiling as a separate issue will deprive Pelosi of a key leverage point in government funding negotiations this fall, according to a person familiar with the administration’s strategy. He also wants to remove the debt ceiling as a potential source of volatility in an otherwise strong economy. Government data released this morning showed the economy grew at a rate of 3.2% in the second quarter, beating expectations.

The administration is also willing to attach a debt ceiling increase to the $13.5 billion disaster relief bill currently before Congress, a source said. However, Democrats have been pushing for the measure to pass on its own and would likely be reluctant to add another controversial provision to what is already politically tense legislation.

“We would rather do disaster relief separately and on their own merits,” said a Democratic aide.

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