The White House and congressional Democrats have moved close to a budget deal that would raise the U.S. debt ceiling for two years, a source close to the talks told CNBC.
An agreement to prevent the U.S. from hitting its borrowing limit and stop government funding from lapsing is “near final,” the person said. Remaining talks relate to “technical language issues,” according to the source.
The developing deal would suspend the debt ceiling through July 31, 2021. It would permanently end the sequester, automatic across the board spending cuts. A sequester would have taken effect in January without congressional action.
The budget agreement would include parity between increases in defense spending and domestic, non-defense outlays — a priority for House Speaker Nancy Pelosi. It would also have about $75 billion in spending offsets, measures conservatives have backed.
Lawmakers have scrambled to strike a deal before they leave for their August recess. Treasury Secretary Steven Mnuchin warns the U.S. could run out of cash to pay its bills by September, setting up the potential for default on the federal debt.
In addition, the government will shut down if Congress cannot pass a spending bill by Sept. 30. While a default would reverberate throughout the global economy and financial markets, a temporary government funding lapse could drag on U.S. economic growth.
Last week, Pelosi said she hopes to bring a budget deal to the House floor by Thursday — the last day the chamber is in session before lawmakers leave for the month of August. She believes it would give the Senate enough time to pass legislation before the chamber departs for its recess next week.