Pelosi: No debt ceiling increase until deal on spending caps

Speaker Nancy Pelosi (D-Calif.) on Thursday said she would not agree to raise the debt ceiling until Congress strikes a deal with the White House to raise spending caps for government funding.

“When we lift the caps then we can talk about lifting the debt ceiling — that would have to come second or simultaneous, but not before lifting the caps,” Pelosi told reporters at a press conference in the Capitol.

{mosads}Congress will need to suspend or increase the federal debt limit by the fall in order to avoid defaulting on its debt. A debt default would roil global financial markets and significantly damage the Treasury Department’s ability to raise money by selling government bonds.

Negotiations over the debt limit have been tied to discussions over raising the spending caps debate, a move that is needed to prevent a significant decline in government spending. Inaction would see both defense and domestic spending drop by about 10 percent in fiscal 2020, which begins Oct. 1.

The White House has demanded that the statutory caps remain in place while raising defense spending through a budget maneuver. House Democrats, meanwhile, have been passing spending bills that would increase funding levels by $17 billion for defense and $34 billion for nondefense.

Negotiations between the Democratic-controlled House, the GOP-led Senate and the White House have made little headway in recent months.