The Trump administration and Congress are reportedly close to reaching a deal to raise the debt ceiling and allow for more federal government spending.
What’s the background?
On July 12, Treasury Secretary Steve Mnuchin told Speaker of the House Nancy Pelosi (D-Calif.) that the federal government was in danger of running out of money by September if Congress failed to quickly raise the debt ceiling before it went on recess in August. The House had planned to go to recess at the end of this week, while the Senate will go on recess at the end of next week.
The Trump administration has been running up increasingly huge deficits, which happens when the government spends more money during a fiscal year than it takes in. The White House predicted that by the end of 2019 the annual federal deficit would pass $1 trillion and remain there for every year until at least 2022.
The deficit only surpassed $1 trillion at one other point in U.S. history: between 2009 and 2012 due to counterrecession efforts. In 2013, it dropped back down to $680 billion, and was $585 billion during former President Barack Obama’s last year in office.
What happened now?
Congressional sources told multiple news outlets, including NPR and Politico, that the Trump administration and congressional leaders were close to striking a deal. According to NPR, the budget being considered right now would suspend the debt ceiling until July 31, 2021, preventing another spending crisis until well beyond the 2020 elections.
A source gave CNBC the same 2021 date, and said that the two sides were hashing out “technical language issues.”
Seeming to confirm this, President Donald Trump told reporters on Monday at the White House, “[W]e’re having very good talks with the speaker of the House, Nancy Pelosi. We’re having very good talks with Chuck Schumer and, of course, with Mitch McConnell and Kevin McCarthy.”
He added, “If you look at debt limit … we’re doing very well on that and I think we’re doing pretty well on a budget.”