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Debt Limit Deal Hinges on Pelosi Review of Spending Cut Options

Bloomberg logo Bloomberg 7/19/2019 Jennifer Jacobs and Erik Wasson
Speaker of the House Nancy Pelosi, D-Calif., leaves the floor to join activists seeking better pay as House Democrats approved legislation to raise the federal minimum wage for the first time in a decade _ to $15 an hour, at the Capitol in Washington, Thursday, July 18, 2019. The bill is expected to fail in the Republican-controlled Senate. (AP Photo/J. Scott Applewhite) © Associated Press Speaker of the House Nancy Pelosi, D-Calif., leaves the floor to join activists seeking better pay as House Democrats approved legislation to raise the federal minimum wage for the first time in a decade _ to $15 an hour, at the Capitol in Washington, Thursday, July 18, 2019. The bill is expected to fail in the Republican-controlled Senate. (AP Photo/J. Scott Applewhite)

(Bloomberg) -- The White House late Thursday sent House Speaker Nancy Pelosi a proposed list of spending cuts to give her options for a budget agreement that she wants to include in a deal to raise the debt ceiling, according to two people familiar with the proposal.

The Trump administration is giving Democrats a menu of savings equaling at least $574 billion to offset the costs of a two-year budget cap agreement. The White House is seeking to pay for at least $150 billion of the cost for raising the caps and the next step would be for Pelosi to accept or reject items on the list of of proposed cuts.

Roughly half of the proposals are cuts and the others come from reforms, both people said. One of the suggested reforms is the drug pricing plan from the White House’s 2020 budget, which would save $115 billion, one of the people said.

There are no revenue or tax increases on the list.

The offer also includes a proposal to extend budget caps for two extra years after they expire in 2021 in order to save $516 billion. Under current law, $126 billion in automatic cuts would take effect by the end of the calendar year if the caps are not raised.

Pelosi and Treasury Secretary Steven Mnuchin said Thursday they are close to an agreement, continuing their conversations even as Mnuchin is in France for a meeting of the Group of Seven. Congressional leaders have been pushing the White House to agree to spending levels for next year, which would allow a budget caps bill to move with the debt limit fix.

Why U.S. Is Having Yet Another Debt Ceiling Debate: QuickTake

Pelosi earlier Thursday said she wants to file a bill this week to set up House votes next week on the package.

“Nothing is agreed to until everything is agreed to, but we are on our way,” the California Democrat told reporters at the U.S. Capitol. “We have a path.”

The Treasury Department has been using so-called extraordinary measures to meet debt obligations since March 2, when the U.S. reached its $22 trillion limit on borrowing.

Mnuchin has said that under one of the Treasury Department’s most conservative estimates, the U.S. will be at risk of defaulting on payment obligations in early September -- before lawmakers are scheduled to return from their summer recess on Sept. 9.

To contact the reporters on this story: Jennifer Jacobs in Washington at jjacobs68@bloomberg.net;Erik Wasson in Washington at ewasson@bloomberg.net

To contact the editors responsible for this story: Joe Sobczyk at jsobczyk@bloomberg.net, John Harney, Anna Edgerton

For more articles like this, please visit us at bloomberg.com

©2019 Bloomberg L.P.

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