Debt ceiling issue tops summer budget agenda for Congress

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DEBT DILEMMA

Atop the absolute must-do list is raising the borrowing cap, or debt limit. Doing so would avert a disastrous, first-ever default on U.S. obligations.

Treasury Secretary Steven Mnuchin says Congress should vote to raise the debt limit before leaving Washington for its traditional August recess. Lawmakers once thought they had until the fall to act.

It would be the first increase of Trump’s presidency, and responsibility for passing it falls chiefly upon the Republicans who control Congress.

Some conservatives, including White House budget director Mick Mulvaney and the hard-right House Freedom Caucus, want difficult spending cuts paired with the higher cap. If those efforts fail, it’s commonly assumed that GOP leaders would have to enlist support from Democrats to pass the legislation.

Republicans secured sweeping spending cuts as the price for a 2011 debt deal with President Barack Obama. But Obama prevailed in demands for a “clean” debt increase in later rounds, most recently in late 2015. House Democratic leader Nancy Pelosi and other top Democrats say they won’t go along with a debt bill if Republicans press ahead with deficit-financed tax cuts for the wealthy.

Mnuchin is using a set of accounting manoeuvrs to keep the government solvent for now.

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SPENDING DEADLOCK

Congress is way behind on the 12 annual spending bills covering the Pentagon and other federal agencies for the upcoming 2018 budget year. Work on those measures, totalling more than $1.1 trillion, was supposed to begin last month, but Republicans have yet to even unite behind a plan of attack — much less execute it.

GOP leaders and the White House must sort through the demands of numerous competing factions, including defence hawks, defenders of domestic spending, and tea party lawmakers. At the same time, they must deal with Democrats, who retain great leverage because their support is needed to advance the legislation.

Trump and his allies generally agree on a big increase for the military, but disagree on corresponding cuts to domestic programs and foreign aid. Democrats are opposed to Trump’s cuts — such as those aimed at the Environmental Protection Agency, foreign aid, grants for first responders, economic development and others — and are pressing for domestic increases. A major battle again looms over money for Trump’s oft-promised wall along the Mexican border. A government shutdown can’t be ruled out when the current budget year end Sept. 30.

One option: GOP and Democratic leaders forge the outlines of an overall agreement, then advance the 12 appropriations bills in a bipartisan fashion. It’s a challenging compromise to pull off and would disappoint key factions.

So far the result has been drift. Some insiders predict the only solution is yet another bill that covers the entire government in one shot, but it might not pass until late this year and that may put some agencies on autopilot.

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BUDGET/TAX IMBROGLIO

After health care, the next priority for Republicans is overhauling the tax system. But to do that — at least without turning to Democrats for help — would first require the GOP to pass a blueprint known as a budget resolution. Congress cannot wrap up action on the 2018 plan, however, until efforts to repeal the Obama-era health law are complete.

That resolution would allow for follow-up legislation on taxes and spending, including a recommended cap on annual appropriations bills.

Republicans are eyeing this course as a way to ease passage of a tax overhaul and cuts to benefit programs such as federal employee pensions and food stamps.

But the path ahead is tricky.

Some defence stalwarts are demanding Pentagon increases greater than Trump’s, and the White House is pushing lower spending for domestic agency operations.

There are accounting tricks used in Trump’s budget, but Republicans cannot resort to using them. That could lead to nonbinding but politically symbolic proposals to cut Medicare, a program Trump says he won’t touch.

Andrew Taylor, The Associated Press

by Canadian Press

Debt ceiling issue tops summer budget agenda for Congress

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