John Yarmouth, D-Ky., says the administration wants to delay a deal to maximize leverage with Congress.
With the White House now negotiating fiscal 2020 spending levels with Republican senators, the House Budget Committee chairman on Tuesday said he’d been told that acting White House Chief of Staff Mick Mulvaney wants to delay a deal until “as close to Sept. 30 as possible” to maximize leverage.
Speaking at the annual Fiscal Summit on government debt, sponsored by the Peter G. Peterson Foundation, John Yarmouth, D-Ky., said Mulvaney “has his own attitude” with his goal of keeping defense spending high while slashing nondefense spending. But in the Senate, Majority Leader Mitch McConnell, R-Ky., who is up for reelection, is less interested in drama over a shutdown or the requirement that Congress raise the debt ceiling.
President Trump, Yarmouth added, “has his own ideas” as the “unpredictable” third element in budget talks, he said.
Democrats, he explained to an audience at the Newseum, favor maintaining “parity” between defense and non-defense spending and want to avoid a threatened $125 billion cut to both under the 2011 Budget Control Act. “The nondefense side covers a lot of national security spending,” he said, citing funds for the Homeland Security Department, the FBI, the Federal Aviation Administration and the Food and Drug Administration.
Yarmouth would favor cutting defense, though the bill his committee approved in April would raise it by only $17 billion, compared with $34 billion for non-defense needs. The automatic cuts “would be devastating for a lot of important priorities,” he added, and “there are lots of ways to pay for them—though we haven’t gotten to that side of the equation.”
Examples he gave are raising the tax on investor-carried interest, and a wealth tax along the lines proposed by presidential candidate and Sen. Elizabeth Warren, D-Mass. “There are lots of ways to generate income without hurting the economy.”
Mulvaney, who spoke hours later to the gathering for which numerous experts of differing ideologies offered proposals for controlling government debt, didn’t address Yarmouth’s charge concerning brinksmanship that risks a shutdown. But he cited progress in talks between Republican senators and Vice President Pence, Treasury Secretary Steven Mnuchin, and acting Budget Director Russell Vought after initial meetings.
“I talked to McConnell today, and there’s lots of time left,” he said. “We know how to get it done—it all comes down to what will be the spending level, flat or last year’s plus, he said. But he acknowledged that Republicans and Democrats do not have a plan for getting together to raise the debt ceiling. And in the talks, “There’s always that sinking feeling you get when someone gets a phone call—and it happens with both parties—and suddenly we’re three steps back.”
Mulvaney said he still considers himself a deficit hawk despite annual deficits that have now risen to $1 trillion. “We’re not going to cut our way to a balanced budget,” he said. “Show me the House majority to cut spending, show me the 60-vote majority in the Senate to cut spending. There’s no center of gravity, and there’s never been one.”
In the 1990s, when President Clinton and a Republican Congress balanced the budget, that was achieved not by cutting spending but “by slowing the rate of growth of spending,” Mulvaney said, which is the approach Trump is now pursuing. “We didn’t do a very good job the first couple of years,” he added. “But if the president were in charge, this is what we’d do.”
Rep. Keven Brady, R-Texas, ranking member of the Ways and Means Committee, defended the 2017 Tax Cuts and Jobs Act when questioned about its role in the rising deficit—the Congressional Budget Office estimated that only about one-fifth of its cost was offset by rising government revenues. “You’re going to get 100 estimates. It’s going to have to play out,” he replied. “We’ll know in eight or nine years what the revenues are.” But already, he noted, payroll tax revenues show people are going back to work, job growth, and wage growth, rising investments and research and development that “has tripled,” he said. “Do we really want to go back to the old economy? I still think the best is yet to come.”
Brady said he would like negotiators to stay “within the spending caps as close as possible. But I worry that caps and debt ceiling are an opportunity for our Democrat friends to shut down the government.”
House Speaker Nancy Pelosi, D-Calif., though pressured by CNN’s Manu Raju to discuss impeachment and the recent insults from Trump while they were both in Normandy, France, to mark the 75th anniversary of D-Day, said she wouldn’t play into the hands of the “diverter in chief.” She did say she “thought we had a working relationship with him” on the long-planned campaign to rebuild the nation’s infrastructure, “but when it came time to pay for it,” the president balked.
Like Yarmouth, Pelosi criticized the Republicans for coming to the budget negotiations talking about debt reduction after having enacted the 2017 tax cuts that cost $2 trillion. Unlike with the bipartisan 1986 Tax Reform Act, they did it “without hearings, in the dark of night,” she said, noting that 83% of the benefits went to the top 1% of taxpayers. “Now they want us to come help fix it,” she said.
Pelosi also said she sends her committee chairs to bipartisan budget talks with the White house with “no instructions. I say be agnostic and put at the center of the table [pursuing] the growth that creates good jobs.” That means being open to ideas, she said, from right or left.