House Speaker Nancy Pelosi said Thursday that any deal to raise the debt ceiling will have to come as part of, or after, an agreement to raise spending caps and avoid automatic budget cuts set to take effect for fiscal year 2020.
“When we lift the caps, then we can talk about lifting the debt ceiling,” Pelosi said. “But that would have to come second or simultaneous, but not before, lifting the caps."
Treasury Secretary Steven Mnuchin, who is leading the budget talks for the Trump administration, has pressed for lawmakers to raise the borrowing limit quickly. The Treasury is using accounting maneuvers to avoid breaching the debt ceiling, and lawmakers must act to increase or suspend the limit and avoid a potential U.S. default. On Wednesday, Mnuchin also said that the debt ceiling and spending caps must be packaged together. “If we reach a caps deal, the debt ceiling has to be included,” he said, according to the Associated Press.
Without an agreement on spending levels, automatic cuts set in place by a 2011 law would reduce defense and non-defense budgets by $126 billion for the fiscal year starting in October.
Pelosi also told reporters that she believes Congress can reach an agreement on the $4.5 billion in additional funding requested by the Trump administration to address the needs of migrants at the southern border.