President Trump’s record on the deficit is primed to take another hit.
Speaker Nancy Pelosi (D-Calif.) and Treasury Secretary Steve Mnuchin are preparing a spending deal that could add as much as $2 trillion to the national debt over a decade.
Trump has sought to avoid signing additional expensive spending bills ahead of his reelection bid next year, and his team had put forward proposals to reduce domestic spending.
But the White House did not have the leverage needed given the Democratic majority in the House, which was dead-set against the spending ceilings suggested by Trump’s administration.
The deadline for raising the nation’s debt ceiling is moving up, and now the administration has even less leverage on the budget deal. Mnuchin does not want to risk a default on the nation’s borrowing limit at all costs, and he has been pressing Congress to raise the debt ceiling before leaving for the August recess.
The deal shaping up would set spending ceilings for the next two years, clearing the path for spending measures that will increase the deficit by roughly $75 billion over the next two years.
This is going to be hard to swallow for Trump, who campaigned on eliminating the debt and has received rare rebukes from conservative allies over his fiscal policies. Spending bills and tax cuts on Trump’s watch have helped raise the national debt from $20 trillion at the start of his presidency to over $22 trillion today.
But the deal wouldn’t be a total loss for Trump.
If the administration and lawmakers can work out all the details, the deal likely would help prevent any government shutdowns between now and Election Day 2020, and it would also put an end to the debate over the debt ceiling.
This deal could also pump more money into the economy, helping to fuel economic growth that has boosted Trump’s hopes for reelection.
“The real good for us is two years of stability, which I think is very important to keep the economy moving in the right direction and government function,” said Rep. Tom Cole (R-Ok.), an appropriator. “The last thing you want moving into an election is to shut down government or an economy that’s nosediving.”