(Bloomberg) -- A leading House conservative said Wednesday that Congress will raise the nation's debt ceiling in September as he appeared to soften his earlier demands that any increase be paired with steep spending cuts.
Republican Representative Mark Meadows, who leads the House Freedom Caucus, said that while he wants changes aimed at cutting the budget deficit, he recognizes the final bill may not contain other conditions and wants to “get it done sooner rather than later.”
“I don't believe we should play around with the full faith and credit of our country -- I'm bullish on getting it done,” the North Carolina Republican said.
His remarks offer some reassurance that the Freedom Caucus won't act as a bloc to make demands that could risk a catastrophic default. Back in May, the Freedom Caucus issued a formal statement demanding that any debt-ceiling increase “be paired with policy that addresses Washington's unsustainable spending.”
A spokeswoman for Meadows said he is still pushing for those kinds of changes.
"Meadows was merely expressing confidence that a deal will be reached to raise the debt ceiling based on conversations he's had at the highest levels," Alyssa Farah, his spokeswoman, said later Wednesday afternoon. "He is in no way backpedaling his opposition to a clean raising of the debt ceiling and will continue to fight for it to be tied to structural reforms and spending cuts."
The Treasury Department warned in a letter last week that Congress should raise the nation's debt limit by Sept. 29 to avoid a damaging default, but the debate is at risk of getting tangled up with other controversial issues when the House returns from its summer recess in early September.
The House is only scheduled to be in legislative session for 12 days in September, and it also needs to pass a stopgap spending measure to keep the government open past Sept. 30.
The fastest way to get an increase through Congress may be for leaders to combine it with the spending bill. That legislation will likely need Democratic votes anyway and leaders have said they prefer one painful vote to multiple ones relying on Democrats in the minority.
Border Wall
But the stopgap measure is likely to become a big political battle in its own right, with looming fights over funding for President Donald Trump's proposed border wall with Mexico and over subsidies for health insurance exchanges under Obamacare.
Rates on Treasury bills maturing in mid-October had risen in recent weeks amid concerns that the debt-ceiling extension would expire around that time and payments for those securities wouldn't be made.
The government's auction on July 24 of $39 billion of three-month bills attracted the lowest demand of any other sale of the securities since June 2009. The bills, which mature around when the Treasury is estimated to run out of money unless lawmakers agree to extend the statutory limit on the nation's borrowing, were sold at a rate of 1.18 percent, the highest since October 2008.
Bond traders should rest easy and trust Congress to raise the debt limit next month, Meadows said.
“I don't see us going beyond September, so if they're trading and factoring that in, I think they're making assumptions based not on the political reality of what's going to get done,” he said.
Democratic Votes
Raising the debt ceiling is a thorny problem for Republican congressional leaders because, even with Meadows on board, some conservatives say they won't vote for an increase without spending cuts. Adding those spending cuts would risk losing the eight Democrats needed to reach the 60-vote threshold for advancing legislation in the Senate.
Democrats have said they would support a debt-limit increase that doesn't include additional conservative policies, although some have flirted with trying to use their leverage to extract concessions.
Republicans could try to use a special fast-track mechanism to raise the debt ceiling with just 50 Senate votes, but that could be a risky strategy, particularly after their failed effort to repeal Obamacare under that procedure. The move could also risk exposing deep divides between House and Senate Republicans, between conservatives committed to deep spending cuts and moderates wary of making those cuts.
Senate Majority Leader Mitch McConnell met Tuesday with Treasury Secretary Steven Mnuchin and Senate Minority Leader Chuck Schumer to discuss the debt ceiling.
‘Way Forward'
Afterward, McConnell said "we are going to be looking for a way forward to do that together to make sure America continues to never, ever default."
A Senate Democratic aide said that at the meeting it was clear that Republicans didn't have a plan yet for how to move the debt-ceiling bill through Congress.
Mnuchin has repeatedly asked Congress for a "clean" debt ceiling increase, even as White House Budget Director Mick Mulvaney has contradicted him and sided with his former House colleagues in demanding that spending cuts or other budget process changes be attached.
Meadows didn't commit to a specific amount by which the debt limit should be raised. He said he prefers an increase of $1.5 trillion, less than the $2.5 trillion requested by the White House that would be enough to push the next fight past the 2020 presidential election.
Raising the debt limit by less “gives you two different bites of the apple to attach something to it,” Meadows said, adding that the larger increase the White House is seeking wouldn't be “prudent.”
--With assistance from Liz Capo McCormick and Alexandra Harris
To contact the reporters on this story: Anna Edgerton in Washington at aedgerton@bloomberg.net, Erik Wasson in Washington at ewasson@bloomberg.net.
To contact the editors responsible for this story: Kevin Whitelaw at kwhitelaw@bloomberg.net, Laurie Asseo
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