Donald Trump has already destroyed the moral full faith and credit of the United States with the rest of the world. That’s a given. Now House Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin have to set that aside and try to figure out how to stop him from doing that fiscally. So far, they’re not having great success.
The House is set to leave for August recess in six working days, and all extraordinary measures Mnuchin has in his toolbox to avoid the debt ceiling will be exhausted in early September, leaving no time for Congress to deal with it when they return after Labor Day. Pelosi and Mnuchin have been talking regularly, with Mnuchin saying they are “very close” to an agreement, but pushing hard for “pay-fors” for the increases in domestic spending Pelosi is insisting upon. Note that, as usual, the massive Republican tax cuts didn’t require any “pay-fors” and are driving the deficit to the point where maybe even Republicans are going to start worrying about it for real.
Meanwhile, Pelosi has shot down a Mnuchin effort to do a stand-alone, short-term debt-ceiling hike and is insisting that it be included in a two-year budget deal that increases spending for both defense and nondefense spending—which would break the sequester from the old Budget Control Act of 2011, in case you’re keeping track, a stated bipartisan goal since 2011.
Pelosi is insisting on “parity,” dollar-for-dollar increases in defense and nondefense spending, as well as a sort of hybrid in the form of $22 billion extra for the next two fiscal years to add to the overhaul of the Department of Veterans Affairs healthcare system passed last year. That’s a bipartisan goal that has mostly received lip service on the Republican side.
The existing budget agreement expires at the end of September, and without a new one, nonmilitary spending would be cut by $55 billion and military spending by $71 billion from 2019 fiscal year levels. Pelosi is in a strong position. Democrats in the House won’t pass a bill that doesn’t include more spending on the domestic side, and Republicans won’t help pass one that doesn’t restore defense spending. In this instance, Mitch McConnell will go for whatever Pelosi can negotiate. In six days’ time. Once those numbers are nailed down, expect lightning-quick action in both chambers. Nothing motivates Congress like getting out of D.C. for eight weeks.
Provided Trump doesn’t blow the entire place up.