GOP presses Trump to make a deal on spending

Congressional leaders face an uphill battle in selling President Trump on a two-year spending deal when they meet with his top advisers at a meeting scheduled in the Capitol on Tuesday.

Speaker Nancy Pelosi (D-Calif.), Senate Majority Leader Mitch McConnell (R-Ky.), Senate Minority Leader Charles Schumer (D-N.Y.) and House Minority Leader Kevin McCarthy (R-Calif.) hope to break the budget stalemate when they meet in Pelosi’s office at 10:30 a.m.

McConnell and McCarthy are eager to strike a deal to avoid the prospect of another government shutdown, even if it means giving Democrats an increase in domestic nondefense spending, which most Republicans would otherwise oppose.

“It’s better politically, but it’s bad for the responsibilities we have of fiscal conservativism,” Sen. Chuck Grassley (Iowa), the Senate’s most senior Republican, said of a two-year spending caps deal, which Pelosi, Schumer, McConnell and McCarthy hope to iron out.

{mosads}Grassley explained the political benefit would be to eliminate the danger of another lengthy government shutdown like the one that shuttered federal agencies for 35 days earlier this year. Asked why a two-year deal is better politically, Grassley responded, “So we don’t shut down the government and you don’t have a continuing resolution that Pelosi is going to have go through [the House] every three months just to remind the people that Republicans can’t govern.”

Treasury Secretary Steven Mnuchin, White House acting chief of staff Mick Mulvaney and acting White House budget director Russell Vought will represent Trump’s position and enter the meeting skeptical of a two-year deal that will draw criticism from the GOP’s conservative base. They will push for sticking to the 2020 spending caps set by the 2011 Budget Control Act, which would effectively cut spending compared to 2019 levels, or for a one-year spending deal, which would cause less sticker shock than a two-year agreement, according to sources familiar with the White House position.

In an interview with The Hill last month, White House economic adviser Larry Kudlow said, “The president has indicated, if the spending caps going all the way back to the 2011 deal are not met, then we will sequester across the board, both defense and nondefense, excluding entitlements, but we will run by those rules. That’s tough stuff. I think that’s appropriate.” 

Senate Appropriations Committee Chairman Richard Shelby (R-Ala.) met with Trump, Mnuchin, Mulvaney and Vought Monday afternoon to make an appeal for not letting the automatic cuts known as sequestration take effect. 

He warned that it would result in a “draconian” cut in defense programs and “send the wrong message to our adversaries around the world.” 

Shelby said it appeared Trump heard and was receptive to his message but didn’t know if that made him more likely to accept a two-year bipartisan spending deal. 

Conservative strategists who favor reduced spending argue that White House officials shouldn’t take any two-year deal proposed by congressional leaders on Tuesday.

“No deal is a good deal because if the caps kick in then you actually have cuts to spending,” said Brian Darling, a GOP strategist and former Senate aide.

“The White House has far more leverage if they just let this deal fall apart and wait. The threat of the sequester kicking in will motivate members of Congress to actually negotiate in good faith and not propose a two-year deal that just blows up the spending cap levels,” he added. Sequestration spending cuts are due to take effect in January if no deal is reached.

Pelosi and Schumer will ask for “parity in increases” for defense and nondefense spending levels and want to avoid reverting to the 2020 spending caps set by the 2011 Budget Control Act, according to a senior Democratic aide.

The Democratic leaders also believe that a spending caps negotiation is the best place to talk about raising the debt ceiling, which the federal government officially hit on March 2. This has forced the Treasury Department to use “extraordinary measures” to pay the nation’s debts, a tactic it can stretch out until September or October.   

{mossecondads}A thorny question for Republicans is whether to insist on spending reforms in exchange for increasing the nation’s borrowing authority.

Mnuchin and Mulvaney met with McConnell in his office to discuss spending caps and the debt limit last week.

“I think it’s always a mistake to give the government more money to borrow and more room to borrow without reforming the way we spend it,” said Sen. Rand Paul (R-Ky.). “You can’t just run a deficit perpetually — and your interest payments are crowding out everything and interest is destined to become the No. 1 item in our budget.

“Only in U.S. budgetary politics do people get rewarded for bad decisionmaking, and basically perpetual bad decisionmaking where they never fix the problem and they just simply continue to raise the ability to borrow more,” he added.

White House officials floated the idea during the Easter recess of moving quickly on raising the debt ceiling by separating it from the broader spending talks.

But Senate Republicans are siding with Democrats in saying that it makes sense to take care of spending caps and the debt ceiling in the same deal.

“It makes sense to me,” Sen. John Cornyn (R-Texas), a member of McConnell’s leadership team.

Cornyn acknowledged that striking a deal with Democrats will mean raising the spending caps compared to fiscal 2019, a far cry from what Trump proposed in his budget.

“Sadly, there doesn’t appear to be a political consensus to reducing the deficit, so I’m taking it as a given that it won’t,” Cornyn said of a prospective two-year deal.

The Trump budget calls for cutting regular spending to the fiscal 2020 levels set by the 2011 Budget Control Act and increasing defense spending through the overseas contingency operations fund, which is not subject to budget caps.

Rachel Bovard, the senior director of policy at the Conservative Partnership Institute, said the White House and GOP leaders in Congress aren’t on the same page about how to handle the spending talks. “There’s a little frustration at the White House because they’ve been saying we don’t want a [spending] caps deal but this is what the bipartisan leadership is now presenting to them,” she said.

She said White House priorities to rein in spending are “completely being ignored” by congressional leaders who “want to blow the deficit with a two-year caps deal.”

Spending negotiations have been bogged down for weeks as a partisan disagreement over disaster relief has sucked up the attention of leaders on Capitol Hill.

Sen. Shelley Moore Capito (R-W.Va.) said she hopes for a breakthrough this week. “We’re stalled now,” she said. “The longer you wait, the less planning you can do, the less investigation, the less transparency there is.”

Schumer on Monday said congressional leaders had cleared a big hurdle in the disaster relief talks by reaching agreement on providing more aid to Puerto Rico, something Trump balked at in March during a lunch meeting with the Senate GOP.

“On Puerto Rico, there’s pretty much agreement. Puerto Rico’s going to be in good shape,” he told reporters. “We’re trying to come to an agreement on the border. There were some things they asked for on the border that we thought were OK and some not.”

–This report was updated at 7:14 a.m.