U.S. Congress, White House near deal on spending, debt limit - source

By Richard Cowan

WASHINGTON (Reuters) - U.S. congressional and White House negotiators are close to a deal to extend the Treasury Department's borrowing authority until July 31, 2021 and establish spending caps on a range of federal programs, a source close to the talks said on Monday.

Details were still being worked out, according to the source, who said negotiators were aiming to set federal government spending caps for fiscal year 2020, which begins Oct. 1, and fiscal 2021 that would include about $75 billion in "offsets" savings.

Any bill crafted by negotiators must be approved by both houses of Congress and signed by President Donald Trump.

Details on the $75 billion in cuts were not yet available.

In remarks to reporters, Trump said "very good talks" with congressional leaders were ongoing, but he did not elaborate.

Some outside experts were not on board with the potential deal.

Maya MacGuineas, president of the Committee for a Responsible Federal Budget, said it "may end up being the worst budget agreement in our nation's history."

If enacted into law, she said in a statement, Trump will have increased discretionary spending by as much as 22 percent over the course of his four-year term "and enshrined trillion-dollar deficits into law."

Those deficits would accelerate a $22.4 trillion U.S. debt that already was growing in part as a result of tax cuts Trump and his fellow Republicans in Congress approved in 2017.

House Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin have been holding private conversations over the past few weeks to achieve a debt ceiling and a two-year budget deal before Congress begins a scheduled five-week summer recess.

Without such a deal, Treasury could bump up against its borrowing limit before Sept. 9, when Congress is set to return.

If the deal comes together, the House and Senate could try passing the measure as early as this week.

Even with an agreement enacted into law, Congress must pass spending bills to implement it. Lawmakers face a Sept. 30 deadline - the end of the current fiscal year - to pass those bills or to temporarily extend current spending while new legislation is brokered.

Last December, Republican leaders thought they had a deal with Trump on legislation funding government activities for the current fiscal year. At the last minute he demanded more money so he could build a wall along the U.S.-Mexico border to keep out undocumented immigrants.

Democrats objected to border wall funding and the breakdown led to record-long, partial government shutdowns until Trump relented.

(Reporting by Richard Cowan; editing by David Gregorio and Steve Orlofsky)

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