Congressional leaders, White House officials fail to reach budget deal

Congressional leaders from both parties and senior White House officials emerged from a meeting in Speaker Nancy Pelosi's (D-Calif.) Wednesday afternoon without a deal on raising spending caps and the debt limit.

Congress and the White House have a few more months to go before the new fiscal year starts on Oct. 1, but lawmakers are eager to take the prospect of another government shutdown off the table sooner rather than later. 

In a joint statement, Pelosi and Senate Democratic Leader Charles Schumer (D-N.Y.) seemed to put the blame on the administration for impeding progress.


"If the House and Senate could work their will without interference from the President, we could come to a good agreement much more quickly," the two leaders said after the meeting.


A senior administration official, however, blamed Democratic leaders for refusing to give ground on the top-line spending numbers.

"Talks broke down today because Pelosi and Schumer refused to come one dollar off absurdly expensive House appropriations bills, which can't pass the Senate and would be vetoed," the official said. "Democrats obviously don't want a deal and are just playing press games."

Without new spending bills signed into law, the government could shut down or continue functioning at current spending levels through a continuing resolution that limits some government capabilities.

If an agreement isn't reached to raise the spending caps, an automatic sequestration of government funds could lower government funding levels by some 10 percent in January.


Treasury Secretary Steven Mnuchin, who attended Wednesday's meeting, laid out the GOP's Plan B if no deal is reached. That plan would freeze current spending levels and prevent deep spending cuts from going into effect if no agreement is reached before the end of September.


"If we can't reach a spending agreement, we are prepared to do a one-year CR [continuing resolution], and a one-year debt ceiling. The president has every intention of keeping the government open and keeping the soundness of the full faith and credit of the government," he said.


Pelosi and Schumer said they were committed to avoiding a CR but ensuring the full faith and credit of the U.S. government.


The deadline for addressing the debt limit is expected sometime in September. Failure to act on it would cause the U.S. government to default on its debt, which would lead to extreme volatility in global financial markets.


Mnuchin also said that during Wednesday's meeting Pelosi reversed her earlier stance that the debt ceiling would not be raised without a spending caps deal.


"The good news is everybody in the room agreed that we will not hold the debt ceiling subject or hostage to spending," Mnuchin said.


A senior Democratic aide disputed Mnuchin's account.


"That never happened in the room," the aide told The Hill, adding that Pelosi still wants a caps deal before addressing the debt ceiling.

Acting White House chief of staff Mick Mulvaney said after the meeting that Democrats had increased their ask for non-defense spending, from $639 billion to $647 billion.

"So you tell me if things are moving in the right direction," he said.


The senior Democratic aide told The Hill that the $647 billion was representative of the overall figure Democrats were using for their appropriations, which includes spending in categories that don't count toward the statutory caps.


Schumer defended Pelosi's decision to move ahead with the House-crafted spending bills without a deal on the top-line numbers.

"The House is going to proceed with its regular order and hopefully we can move the senate to regular order. A one-year CR is bad policy, it's bad politics and it's a fallback," he said. "We should be negotiating a bill .... We want to do better."

Other negotiators said progress was made at Wednesday's meeting but reported that multiple issues remain.


"It was overall a good meeting," said Senate Appropriations Committee Chairman Richard Shelby (R-Ala.), who participated in Wednesday's talks. "We had a serious discussion."


The meeting included Pelosi, Schumer, Senate Majority Leader Mitch McConnell (R-Ky.) and House Minority Leader Kevin McCarthy (R-Calif.), as well as senior lawmakers from the Senate and House Appropriations committees.


Mnuchin and Mulvaney represented the White House.


A congressional source familiar with the meeting called it a "waste of time."


When asked what comes next, Shelby responded, "That's a good question. I asked too."


"I believe that the secretary of the Treasury, on behalf of the administration, and the Speaker are going to talk," he said.


Updated at 6:42 p.m.