President Trump sided with Democrats on adding a three-month extension of the U.S. debt limit and government spending to a hurricane-relief bill over the arguments of fellow Republicans, who pressed for a longer debt extension, said several people with knowledge of the discussions.
Trump confirmed the agreement an hour after meeting with congressional leaders Wednesday at the White House, telling reporters on Air Force One later that the deal with Democrats would be "very good."
Just hours earlier, House Speaker Paul Ryan — who was in the meeting with Trump — had told reporters the Democratic proposal was "unworkable" and "ridiculous."
The plan would extend the U.S. debt limit and funds to keep the government running through Dec. 15, Democratic leaders said Wednesday.
"Both sides have every intention of avoiding default in December and look forward to working together on the many issues before us," Senate Democratic leader Chuck Schumer and House Democratic leader Nancy Pelosi said in a joint statement after leaders of both parties met with the president.
Treasury futures dropped to session lows after news of the deal. Yields on T-bills maturing Oct. 5 and Oct. 12 extended their drop by another five basis points, while the bill curve steepened from October maturities out to December tenors.
Republican leaders and Treasury Secretary Steven Mnuchin were pushing for a longer-term debt-limit deal, according to several people with knowledge of the meeting. They cited a variety of reasons, including market reactions and the idea Democrats were using the short-term offer to try to get more policy concessions, one person said. But Trump said he wanted a deal, that person said.
A three-month deal was the last thing Mnuchin wanted, an administration official said.
Other people familiar with the meeting said Trump and congressional leaders had a prolonged discussion on how long to extend the debt limit, and after Democrats rejected GOP leaders’ proposed 18-month and six-month extensions, eventually the president said he agreed with Democrats on a three-month plan. At that point, Senate Majority Leader Mitch McConnell stepped in to say a short-term government spending bill should also be added.
At one point late in the meeting, the president’s daughter Ivanka entered the Oval Office to say hello, said an aide briefed on the discussion.
Senate Republican leaders had planned to use the measure to suspend the debt ceiling past the November 2018 congressional elections, but Trump’s move upended their strategy.
The House passed $7.4 billion for a federal disaster-relief fund Wednesday, two days before it’s set to run out. The measure, passed 419-3, is designed to provide relief to tens of thousands of homeowners from flooding caused by Hurricane Harvey in Texas and other parts of the Gulf Coast.
The House bill, H.R. 3672, meets a White House request for $7.4 billion in disaster funds for the Federal Emergency Management Agency and $450 million in funding for the Small Business Administration. Additional FEMA funding is to be provided later, according to House aides.
Some conservative groups, such as Heritage Action, support this disaster aid without spending offsets. That may help Ryan gain votes of conservative lawmakers when the legislation comes back from the Senate. Still, conservative groups like the Club for Growth oppose the initial package because it would add to the deficit. Both groups oppose linking the debt ceiling to disaster funds.
Mnuchin said Congress needs to raise the debt ceiling by Sept. 29.
