The White House lacks a unified plan to increase the government's borrowing cap as a likely September deadline is drawing near, said Mick Mulvaney, director of the Office of Management and Budget.
A failure by Congress to raise the debt ceiling could send dangerous shock waves through the global economy. The federal government could be at risk of defaulting on obligations such as interest payments on bonds as well as temporarily halting benefit programs.
The White House budget director suggested in an interview Thursday with reporters that neither the Trump administration nor Capitol Hill lawmakers had set their terms for an agreement.
"It's fair to say we haven't settled on a final way to address the debt ceiling any more than the Hill has," Mulvaney said.
The former South Carolina congressman added that none of this was necessarily "unusual."
Under the current borrowing restrictions, the government has already been taking extraordinary measures and will likely be unable to pay its bills at some point in September. But Congress still has a recess scheduled in August that could create time pressures. Private analysts say the debt ceiling deadline could be extended into October.
Mulvaney said he would like to see the debt ceiling raised in July.
But Trump administration officials still have yet to resolve internal differences on the best strategy to increase the legal cap on government debt, which already exceeds $19.8 trillion.
Mulvaney suggested he would like to have any increase in the borrowing authority be attached to other spending changes, a move that could attract Republican support but alienate Senate Democrats. President Donald Trump's budget proposal seeks to beef up spending on the military and border security while cutting many social programs.
Treasury Secretary Steve Mnuchin has indicated he would like a "clean" bill to raise the debt ceiling, so it would not have to be tied to any spending changes, but Capitol Hill conservatives are resisting the idea.
"Secretary Mnuchin believes it needs to be clean. I think the vast majority of the Republican conferences would not agree," said Representative Mark Meadows R-N.C., chairman of the Freedom Caucus, a group of strongly conservative House Republicans.
Mulvaney said Mnuchin would ultimately be in charge of handling the debt ceiling push "once we do settle on our formal policy, if we do."
A 2011 standoff between Republicans and the Obama administration over the debt ceiling led to tighter controls on spending. That standoff was not resolved until the 11th hour and prompted Standard & Poor's to impose the first-ever downgrade to the country's credit rating.
Talks with lawmakers
The administration is also engaged in talks with House and Senate Republican leaders about what kind of increase they could possibly pass. Mulvaney said the issue was not a source of division inside the White House or the Republican Party.
The discussions involve whether the House should increase the debt limit enough to last through the 2018 election or the president's first term.
"It would be foolish of us to come up with a policy devoid of having talked to the Hill," Mulvaney said.
Congress also faces pressure to pass a budget in September for next fiscal year, as well as to address administration priorities that include a tax code rewrite and the proposed repeal of former President Barack Obama's 2010 health insurance law.
Failure to pass spending bills could cause a government shutdown and cause nonessential government agencies to close. Trump suggested on Twitter last month that he might welcome a shutdown to help shake up the government.
Mnuchin told the Senate Budget Committee this week that "at times there could be a good shutdown," though he cautioned it's not the administration's "primary objective."
With action on the budget front otherwise stalled, the House Appropriations Committee on Thursday approved the first of 12 spending bills, an $89 billion measure that contains generous increases for veterans programs and Pentagon construction projects.
But the White House and its GOP allies — much less opposition Democrats — haven't come up with an overall plan for implementing Trump's promises to increase the Pentagon budget and advance more than $500 billion worth of annual domestic agency spending bills.