Democrats say White House offer on budget deal has 'nonstarters'

Democrats said Friday there are "nonstarters" in a new White House offer that includes $1.1 trillion in options to offset spending increases in a two-year agreement that would raise the budget caps and hike the debt limit.

"This is the White House's starting point for negotiations on this aspect," a Democratic source close to the talks told POLITICO. "They understand these levels are nonstarters for us. Talks will continue."

Democrats say they are reviewing the White House bid, however.

A senior Trump administration official confirmed that the White House on Thursday night proposed $574 billion in ways to counteract spending increases, in addition to $516 billion in savings that would be achieved by freezing fiscal 2021 spending levels for fiscal years 2022 and 2023.

Bloomberg first reported the offer, which includes a host of reforms that Democrats likely would never approve. It also includes a drug pricing proposal detailed in President Donald Trump's fiscal 2020 budget request, and doesn't propose cuts to Social Security.

House Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin have been locked in negotiations for days, hoping to clinch a deal by week's end that would stave off $126 billion in automatic spending cuts and a market-roiling debt default. Time is running out to seal a deal, with the House expected to leave for summer break on July 26. The new fiscal year begins Oct. 1.

Mnuchin said on Thursday that congressional leaders and the White House have "reached an agreement" on overall spending levels in a two-year deal to raise the budget caps, in addition to settling on a two-year debt limit increase.

But the Trump administration's demand to offset the spending increases represents a significant hurdle to finalizing a deal, with the administration seeking at least $150 billion.

The White House also wants a guarantee that Democrats won't insert "poison pills" in individual spending bills, like provisions barring the use of federal funds to build Trump's border wall. Democrats have demanded "parity," or dollar-for-dollar increases in military and non-military spending, in addition to $22 billion in funding for veterans health care over the next two fiscal years.