Congress Remains at a Stalemate on Shutdown-Avoiding Deal, As Debt Ceiling Deadline Looms

Congress and the White House remain divided in negotiations over how to avoid massive spending cuts and a government shutdown this fall, despite a deadline to act that may arrive sooner than expected. 

The head of the Senate Appropriations Committee said he would not move forward on any fiscal 2020 spending bills until congressional leadership reaches an agreement on top-line funding levels, backtracking from a previous claim that his panel would move forward with those bills in July regardless of the larger budget talks. Top lawmakers and the White House are still negotiating a compromise to offset automatic budget cuts that would slash defense and non-defense spending by a total of $125 billion in fiscal 2020. The officials must also come up with a path forward for lifting the nation’s borrowing limit, as the Treasury Department is set to hit its debt ceiling later this year.

Sen. Richard Shelby, R-Ala., the appropriations chairman, told reporters this week he had relented to a request from Senate Majority Leader Mitch McConnell, R-Ky., that the committee wait for the overall funding numbers before proceeding with bills to set line-by-line spending levels at each federal agency. 

House Speaker Nancy Pelosi, D-Calif., indicated on Tuesday those figures were no closer to coming out. The House has already passed most of its fiscal 2020 spending bills, but those measures will need to be reconciled with their Senate counterparts once the upper chamber takes action. Senate leaders have said they are taking a back seat while Democrats negotiate with the Trump administration, but Pelosi said no talks are scheduled. The two sides have met repeatedly, she said, and have nothing new to discuss. 

"I don’t see any reason to have a meeting,” Pelosi said. “They know where we are.” She added Democrats are waiting for a response from the administration, where talks are being headed up by Treasury Secretary Steve Mnuchin, and the two sides can move forward if there are any new developments. 

The White House floated a one-year stopgap bill, while delaying the dramatic cuts required by the 2011 Budget Control Act and putting off any risk of hitting the debt ceiling and defaulting. Democrats have called the proposal a fallback, but have suggested Congress take a more nuanced approach that would allow for more prioritized spending. A group of more than a dozen Republican senators, meanwhile, has outright rejected the proposal in a letter to Trump administration officials, saying it would damage readiness at the Defense Department. 

Shelby did not sign that letter, but said on Tuesday he would prefer to see a budget deal to lift spending caps. Congress has struck three two-year funding deals to avoid the full impact of the sequestration caps. The chairman said his committee would work quickly to pass appropriations bills as soon as an agreement is reached. 

Congressional leaders have also said they are intent on resolving the debt ceiling issue as part of any deal to lift budget caps and avoid a shutdown come Oct. 1, when current funding for all of federal government is set to expire. The Treasury technically hit its debt limit in March, but took its usual “extraordinary measures”—such as suspending daily reinvestments into the Thrift Savings Plan’s government securities (G) Fund, as well as investments into the Civil Service Retirement and Disability Fund and the Postal Service Retiree Health Benefits Fund—to delay a default.

The administration had hoped it could buy enough time to wait until the new fiscal year to take further action, but the Bipartisan Policy Center said the Treasury could hit its borrowing cap in early September due to “weaker-than-expected” tax revenue.