Senate Republicans and the Trump administration are struggling to reach an agreement on a path forward on critical budget and spending issues, threatening not only another government shutdown and deep spending cuts but a federal default that could hit the economy hard.
GOP leaders have spent months cajoling President Trump in favor of a bipartisan budget deal that would fund the government and raise the limit on federal borrowing this fall, but their efforts have yet to produce a deal. And the uncertain path forward was underscored a few days ago at the Capitol, when a budget meeting between key Senate Republicans, including Majority Leader Mitch McConnell (R-Ky.), and senior White House officials left out Democrats, whose votes will be imperative to avoid a shutdown and an economy-shaking breach of the federal debt limit.
“We’re negotiating with ourselves right now,” said Senate Appropriations Chairman Richard C. Shelby (R-Ala.). “The president, the administration, has some views, maybe, that are a little different sometimes than the Senate Republicans have. So we’re trying to see if we can be together as best we can.”
The GOP dysfunction — coupled with a new House Democratic majority with its own priorities — leaves the sides much farther apart than they were at this point in last year’s budget process, which ended in a record-long government funding lapse. At the time, Republicans controlled both chambers of Congress, but negotiations stalled over funding Trump’s immigration priorities.
Trump and Congress face a trio of difficult budget issues. Congress must pass, and Trump must sign, funding legislation by Oct. 1 to avoid a new shutdown. They need to raise the federal debt limit around the same time, according to the latest estimates. Failure to do so would force the government to make difficult decisions about which obligations to pay, and could be considered a default by investors, shaking markets and an economy already showing some signs of alarm. And by year’s end, they also need to agree on how to lift austere budget caps that will otherwise snap into place and slash $125 billion from domestic and military programs.
Senate Republicans and the administration thus far have not agreed on how to proceed on any of the issues, making it all but impossible for them to enter into substantive negotiations with Democrats. That has left the Capitol in a state of suspension over what the coming months will hold.
“True to form, Congress and the White House seem to be intent on waiting until the absolute last minute to address all these issues that we’ve known about,” said Maya MacGuineas, president of the nonpartisan, nonprofit Committee for a Responsible Federal Budget. “Basically everything they could do wrong, they are doing wrong.”
Tensions between key Senate Republicans and White House acting chief of staff Mick Mulvaney have been on display for months, and GOP lawmakers and aides partially blame that frayed relationship for the halting pace of talks. Mulvaney was a member of the conservative House Freedom Caucus before he joined the administration, first as White House budget director before becoming acting chief of staff, and he has advocated dramatic spending cuts opposed by lawmakers of both parties.
Mulvaney has been slow to come around to the need for a bipartisan budget deal that would raise domestic and military spending caps, even after McConnell met privately with Trump last month and got the president’s blessing to proceed with such a deal, said a senior GOP Senate aide who spoke on the condition of anonymity to describe private conversations.
In other words, absolutely count on a government shutdown this fall. The only question is how long it will be, and how much damage Republicans will do to an already weakening economy.
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