The Trump administration has laid out a wide array of spending cuts and tweaks to mandatory programs for Democratic leaders to consider for inclusion in a two-year discretionary caps and debt limit package.
The White House offsets menu includes $574 billion culled from items in President Donald Trump’s fiscal 2020 budget request, according to a source familiar with the proposal. In addition, there’s $516 billion in “structural reforms” obtained by extending current discretionary spending limits by another two years, through fiscal 2023.
The source suggested extending the caps for another two years would be the more politically palatable option for Speaker Nancy Pelosi, who is leading the talks for Democrats.
The savings from that proposal would come from freezing the overall spending levels for fiscal 2022 and 2023 at their current law fiscal 2021 limit of almost $1.15 trillion. Since the new budget baseline created by the increased caps for the next two fiscal years would assume inflationary increases in the years beyond, setting limits for those years would produce offsets — unless the new caps are overridden again in two years.
The administration wants at least $150 billion in savings to emerge from the discussions, a figure described as a “floor.” A GOP source also said the administration won’t support “gimmicks” in the deal, or proposals that generate paper savings but don’t actually reduce deficits over time.
The White House ask is much larger than the $38 billion in net offsets for the previous two-year spending deal enacted in 2018. But it’s in the ballpark of the total $103 billion in offsets for that $358 billion overall package, which included a smorgasbord of unrelated provisions, mainly tax and health care “extenders.”
The administration options proposal was first reported by Bloomberg.
Negotiators on the two-year spending caps agreement are down to hammering out how much of the package will be offset with budget cuts and revenue-raisers, and what those “pay-fors” will look like.
Senate Minority Leader Charles E. Schumer said Thursday afternoon that offsets are the “major outstanding issue” in discussions. “That’s what we’re discussing. We’re close, and I think there’s a desire to come to an agreement from all of us,” Schumer said, adding that offsets haven’t “stood in the way in previous deals.”
Treasury Secretary Steven Mnuchin said earlier Thursday there was basic agreement on a framework for the deal, which includes pushing out the date at which the debt ceiling becomes an issue for at least two years.
House Minority Leader Kevin McCarthy said the final spending cap figures are likely to come in somewhat below House Democrats’ preferred framework for nondefense funds. But including higher military spending, the package could still run close to $350 billion over two years, not counting other potential add-ons.
Schumer suggested that there were differences within the Trump administration on how hard to push on offsets. He said acting White House Chief of Staff Mick Mulvaney was driving a harder-line approach favored by conservatives that could prove unpalatable to Democrats.
Worries about Mulvaney
“My worry here is that if Mulvaney tries to be too hard on the offset side that we wouldn’t come to an agreement. So I hope he’ll let Mnuchin and us come to the agreement. And I think we could get it quite soon,” Schumer said. “You always worry because Mulvaney is such a hard-liner on these issues. But we’ll see. Let’s hope that cooler heads prevail and we come to an agreement soon.”
There’s been no outward sign of divisions within the White House, though a senior administration official on Wednesday evening tried to downplay the odds of a quick agreement. But even some of Mulvaney’s fellow Republicans, particularly in the Senate, are wary of the former South Carolina GOP lawmaker’s approach to the talks.
Senate Appropriations Chairman Richard C. Shelby said Trump should follow Mnuchin’s lead over other voices in his inner circle.
“I think he should listen to the secretary. I think the secretary has been forthcoming and forthwith and is trying to avoid a catastrophe on the debt limit and also on appropriations. And I think he has been a voice of reason,” Shelby said.
It wasn’t clear if another potential obstacle to a deal, a commitment to avoid “poison pill” policy riders on the forthcoming fiscal 2020 appropriations bills, had been resolved.
Sen. Steve Daines, R-Montana, head of the Senate’s Pro-Life Caucus, was circulating a letter to Trump urging him to ensure that no riders currently in the House-passed spending bills aimed at removing abortion restrictions are included.
Shelby said once a spending caps deal is reached, he and Senate Appropriations Committee ranking member Patrick J. Leahy, D-Vermont, will hopefully reach an agreement to avoid poison pills being added to the 12 spending bills. The two lawmakers could have a colloquy to announce such an agreement, he said.
“I hope so. We have a good relationship. We’ve talked about it,” Shelby said. “The fewer poison pills or anomalies and things that people put on, or try to put on appropriations, the better off we are. In other words, if we stay with appropriations as much as we can and work together, we’ll move the bills. If you put obstacles in the way, it causes trouble.”
Doug Sword contributed to this report.