The White House is pushing congressional leaders to strike a spending deal and increase the debt limit in the next two or three weeks, jolted by a recent report that found the Treasury Department was running out of cash much faster than previously forecasted.
But the talks have bogged down amid acrimony between Democrats and the White House, and now Washington’s leaders run the risk of a fiscal pileup that could also imperil President Donald Trump’s effort to update the North American Free Trade Agreement.
White House officials have said the debt ceiling must be raised by early September to ensure the government can pay its bills. And spending on many federal programs expires at the end of September, requiring a separate deal to prevent a government shutdown.
Treasury Secretary Steven Mnuchin consulted with House Speaker Nancy Pelosi, D-Calif., this week and met Wednesday with GOP leaders, alongside acting chief of staff Mick Mulvaney, trying to forge a solution. Pelosi has made clear that any increase in the federal debt limit should come as part of a broader, two-year budget deal – an approach also favored by leading Senate Republicans – but it’s far from clear whether lawmakers and the administration will be able to reach such an agreement before Congress leaves town for its annual summer recess in August.
Mnuchin is serving as the White House’s emissary with Democrats because Pelosi has largely brushed aside most other senior White House officials.
She has dismissed Mulvaney, saying he has “no credibility” on spending issues because he pushed to shut down the government while serving in the House. She has also castigated Attorney General William Barr and accused him of lying to Congress, and appeared not to even know who the White House’s budget chief was during a recent meeting.
The one bright spot had appeared to be her respect for U.S. Trade Representative Robert Lighthizer, who had spent more than a year carefully cultivating ties with top Democrats in a push to revamp NAFTA. But even that effort is now under extreme strain, as labor unions and vocal Democrats are demanding major changes that might be politically infeasible.
All these dynamics will test the withering relationship between Pelosi and Trump. Pelosi has tried to hold back her caucus from launching a formal impeachment proceeding against Trump, but she faces mounting pressure as the 2020 presidential campaign picks up steam.
Trump’s attacks against her became quite personal last month, when he called her a “nasty, vindictive, horrible person” and a “disgrace” during a Fox News interview in France. That led Pelosi to effectively dismiss him, responding “I’m done with him” just a few days later.
Pelosi has also shown little regard for Trump’s top deputies. She has been unsparing in her public criticisms of Mulvaney. At one point during a budget negotiation in May, Pelosi snubbed acting budget director Russell Vought when he spoke up to reiterate a point. Turning to Vought, Pelosi asked, “What was your name again, dear?” according to an individual who witnessed the exchange and spoke on the condition of anonymity to recount it.
This unraveling could have real consequences for the country.
A think tank warned on Monday that the debt ceiling must be raised very soon or the government could risk missing payments on its bills by early September, but so far lawmakers and the White House have not been able to come up with a solution. Part of the problem, congressional aides and White House officials said, is a disconnect between senior administration officials and Democrats on Capitol Hill.
On Tuesday, before her phone conversation with Mnuchin, Pelosi went so far as to dismiss the idea of meeting with administration officials at all while the budget impasse languishes, saying it would be pointless.
“I don’t see any reason to have a meeting. They know where we are. We’ve met, we’ve met, we’ve met,” Pelosi told reporters.
Pelosi’s comments left Republican lawmakers fuming and alarmed as they pointed to the series of approaching deadlines.
To cut a deal, White House officials have signaled an openness to increasing spending levels for next year, a position they did not hold a few months ago. But Democrats want to lock in more spending increases, and talks have broken down repeatedly. Congress is scheduled to be on recess in August and the first week of September, leaving scant time for action.
“We’re headed for a train wreck, so she’s either got to step up and start leading or just yield to the Senate, I suppose,” said Sen. Kevin Cramer, R-N.D. “I’m one, having served in the House, that’s a little bit sympathetic to the management challenges she has, but that’s the price of leadership.”
At the same time, Republican leaders and Trump administration officials had long hoped to see action on Trump’s revamped North American trade deal, a top promise from his campaign, before the recess. But that now looks barely feasible as House Democrats and organized labor press to reopen the deal to make changes including strengthened enforcement of environmental and labor standards, and to address provisions on prescription drugs they see as overly generous to industry.
Rep. Rosa DeLauro, D-Conn., a longtime Pelosi ally who has been vocal in the trade debate, dismissed the chances of a vote on a new trade deal before fall.
“It’s not going to happen,” DeLauro said. “It’s got to be right in the content, which is what we’re striving for. That doesn’t mean it’s not going to be done. But I don’t believe it will be done before the August recess.”
DeLauro added that Pelosi will be the one to make the call on when – and if – to move on the trade deal. “That’s her prerogative.”
In an interview at a CNBC event this week, White House economic adviser Larry Kudlow said the administration was waiting for a “green light” from Pelosi before moving forward. That ability of the speaker to single-handedly sink the North America trade deal by declining to put it on the floor has led to an increasingly desperate pressure campaign by Republican lawmakers and administration officials, including Vice President Mike Pence, who has been traveling to Midwestern cities with manufacturing bases to make the case for the pact.
Trump had previously threatened Democrats that he would completely withdraw from the existing 1994 NAFTA deal if the updated version does not receive a vote, but he has not made that threat in a while as he tries to solicit more help from Pelosi.
“We need pressure on Speaker Pelosi to actually confirm that she will bring it up, and that she will be supporting this initiative,” Sen. Joni Ernst, R-Iowa, pleaded Tuesday.
But if Pelosi is feeling pressured to act swiftly on the trade deal, she has not shown it. At a recent news conference, she alluded to – and dismissed – the anxiety expressed by Republicans over allowing the pact to linger so long that it becomes fatally tied up in the 2020 presidential campaign and gets killed by campaign trail politics.
“The ambassador [Lighthizer] frequently will say, ‘We just don’t want to get this into the presidential,’ ” Pelosi said. “But that really doesn’t have anything to do with – it’s about the substance of the agreement, not the politics at all.”
For Pelosi, the mounting pressures over the budget, debt ceiling and trade arrive as she is coming off the most divisive episode of her speakership to date, last month’s vote on an emergency border spending bill that tore apart her caucus. After Pelosi caved to demands from moderates and put a Senate bill opposed by liberals on the floor for a vote, some liberals turned on the moderates in an ugly and very public display of disunity, unloading on them for supporting the legislation.
Although Pelosi has long commanded widespread bipartisan respect as a steely negotiator, the episode led some to question whether she will be able to steer a trade bill or a budget deal through her restive caucus. Some senior administration officials and Republicans have questioned whether Pelosi controls enough votes to deliver on a compromise.
“After watching how much difficulty she had passing the emergency supplemental, I don’t know where the votes are – and she knows that better than I would,” said Sen. John Cornyn, R-Texas. “She’s a dealmaker but she’s also going to extract as much out of the deal as she can, so that’s why she’s not in a big hurry.”
Even as Pelosi has sought to keep the lid on liberal demands for impeachment proceedings against Trump, that task could get exponentially tougher next week, when former special counsel Robert Mueller III will appear before Congress for the first time to testify.
Pelosi’s defenders, though, say that if deals on the budget or on trade prove elusive, the fault lies not with the House speaker but with a president who has proved to be an unreliable negotiator time and again. In past rounds of budget brinkmanship, Trump repeatedly shifted stances or undercut his own top lieutenants, leading Democrats to question whether they have a partner in the White House they can work with.
In private, Pelosi and Trump’s conversations on the border spending bill and other topics have been more cordial and productive than their public comments might suggest, aides say. But for the House speaker and the president, the coming battles over the budget and trade could prove the biggest test yet.
“If anybody can do it, it’ll be Nancy, and I think that over the years of her leadership she has proven that,” said Rep. Lucille Roybal-Allard, D-Calif., a senior member of the House Appropriations Committee. But, Roybal-Allard said, “I think this time is more challenging than ever.”