Trump, Schumer look at ending debt ceiling

Top Democrats vow to work on plan

President Donald Trump and Senate Minority Leader Charles Schumer have agreed to pursue a deal that would permanently remove the requirement that Congress repeatedly raise the debt ceiling, three people familiar with the decision said.

Trump and Schumer discussed the idea Wednesday during an Oval Office meeting. Schumer, Trump and House Minority Leader Nancy Pelosi, D-Calif., agreed to work together over the next several months to see if they can finalize a plan, which would need to be approved by Congress.

One of the people familiar with the discussion described it as a “gentlemen’s agreement.”

Senate Democrats are hopeful that they can finalize an arrangement with Trump by December.

“The president encouraged congressional leaders to find a more permanent solution to the debt ceiling so the vote is not so frequently politicized,” White House spokesman Sarah Huckabee Sanders said.

The three people spoke on condition of anonymity because they were not authorized to discuss the contents of the meeting.

Trump said Thursday that there are “a lot of good reasons” to get rid of the U.S. debt ceiling.

“For many years, people have been talking about getting rid of [ the] debt ceiling altogether,” Trump said Thursday at the White House. “And there are a lot of good reasons to do that, so certainly that’s something that will be discussed. We even discussed it at the meeting that we had yesterday.”

Another person familiar with the meeting said Vice President Mike Pence is open to changes that he considers in line with the so-called Gephardt rule — a parliamentary rule making it easier to tie raising the debt ceiling with Congress passing a budget. The rule is named after former House Majority Leader Richard Gephardt, D-Mo.

The deal comes after Trump sided with Democratic leaders Wednesday on a plan to temporarily raise the debt ceiling and fund hurricane relief, rejecting a Republican plan and vexing many in the Republican Party.

House Speaker Paul Ryan, R-Wis., said at a news conference Thursday that he opposes scrapping the debt limit process.

“I won’t get into a private conversation that we had [at the White House], but I think there’s a legitimate role for the power of the purse of the Article 1 powers, and that’s something we defend here in Congress,” he said.

Article 1 of the Constitution sets up Congress’ powers, giving Congress the authority to write and pass legislation and appropriate government money.

The U. S. government spends more money than it brings in through taxes and fees, and it covers that gap by issuing debt to borrow money. The government can borrow money only up to a certain limit, known as the debt limit or the debt ceiling. The government routinely bumps up against the ceiling, requiring Congress to raise it again and again. The votes are often politicized and can cause instability among investors.

If the debt ceiling isn’t raised, investors have warned that the stock market could crash because the government could fall behind on its obligations if it isn’t allowed to borrow more money.

Treasury Secretary Steve Mnuchin has suggested scrapping the existing debt limit process and replacing it with a process that automatically lifts the borrowing limit every time Congress appropriates future spending.

The discussion between Trump and Schumer came during an Oval Off ice meeting that included other congressional leaders. At Wednesday’s meeting, Trump and the Democrats agreed to suspend the debt limit until Dec. 8. If Congress approves that suspension in the coming days, then lawmakers will have to revisit the matter again soon, potentially setting up another difficult vote.

The Treasury Department can use emergency powers, such as delaying certain payments, to avoid defaulting on its debt. That means Mnuchin won’t run out of cash Dec. 9, and probably will have several more months of flexibility before the issue will have to be revisited.

Eliminating the debt limit would be difficult for many Republicans to swallow, particularly in the House, because conservatives have used the ceiling on borrowing authority as a negotiating point to try to force broader government spending cuts.

The most significant standoff occurred in 2011, when conservatives forced a showdown that rattled financial markets and prompted Standard & Poor’s to downgrade its rating on sovereign U.S. debt. The battle resulted in $2 trillion in budget cuts.

“You’re going to have trouble getting people to agree to having [ the debt limit] raised automatically,” said Sen. John McCain, R-Ariz.

The conservative Republican Study Committee on Thursday released a list of 19 policy suggestions aimed at reining in federal spending that could earn their support on a measure to raise the debt ceiling.

Also, a number of Senate Republicans said they would support removing the debt ceiling. “I want to get rid of it,” Senate Finance Chairman Orrin Hatch of Utah said Thursday.

Sen. David Perdue, R-Ga., also said Thursday that the debt ceiling has been “ineffective,” and he will work on a conservative proposal before December to scrap it and overhaul the process.

“It’s an unpopular vote that nobody likes taking,” John Thune of South Dakota, the No. 3 Senate Republican, said Thursday. “There is probably some support on both sides for that. But I hope the president will be talking to Republican leadership about that.”

Pelosi also supports ending the debt ceiling.

“Why don’t we just do away with it?” she told reporters Thursday. “We’re not going to let the government default.”

House Freedom Caucus members, meanwhile, expressed frustration Thursday with how Republican congressional leaders are handling the party’s legislative agenda.

“If we get to December and we have not repealed and replaced Obamacare,” funded Trump’s Mexican border wall or overhauled tax laws, “it’s not going to be pretty,” Freedom Caucus Chairman Mark Meadows said at a Bloomberg News breakfast.

The North Carolina Republican acknowledged that his group can’t stop the short-term debt limit deal, though he said the agreement will put the GOP in a poor negotiating position in December when government spending and the debt limit would be set to expire.

“No way the president will be negotiating from a position of strength,” Meadows said in a separate interview on Bloomberg TV.

But Meadows, who played a key role in the effort to unseat then-House Speaker John Boehner in 2015, dismissed talk of any effort to oust Ryan.

“I think there’s going to be rebellion against everybody, not just the leadership” and the difficulty would be “not just a leadership thing” but for all House Republicans, said Meadows, referring to the 2018 midterm elections. Information for this article was contributed by Damian Paletta and Ashley Parker of The Washington Post; and by Billy House, Jennifer Epstein, Laura Litvan and Erik Wasson of Bloomberg News.