By Jeff Mason and Richard Cowan
WASHINGTON (Reuters) - U.S. Treasury Secretary Steven Mnuchin said on Monday the Trump administration and Congress were getting close to a deal on raising the U.S. debt ceiling and he urged lawmakers to take action on the issue before leaving for an August recess.
In addition, Mnuchin and congressional leaders have been discussing a possible two-year budget deal that would set overall federal spending levels for fiscal 2020, which begins on Oct. 1, and for fiscal 2021, he told reporters during a briefing at the White House.
Mnuchin said he did not see a government shutdown looming over the issue. He said there was a preference in both parties to agree on the debt ceiling increase and a budget pact.
"That is the first choice, and I think... we're getting closer," Mnuchin said.
U.S. borrowing authority could be exhausted sometime in September, according to the latest administration estimates, rather than in October or November, as had earlier been projected.
That means the government could hit its credit limit just as Congress comes back into session in the fall if it does not reach a deal to raise the debt limit before then.
Without an extension of that authority, the Treasury would have difficulty getting lenders to continue servicing a public debt that has topped $22 trillion, potentially causing defaults that likely would shake global financial markets.
Without a budget deal, defence and non-defense programs could face deep, across-the-board spending cuts that most Republicans and Democrats want to avoid or partial government shutdowns.
Mnuchin said all parties wanted to reach a deal on budget issues, along with the debt ceiling.
He said that if a deal on all of the issues were not reached before lawmakers were scheduled to recess for the summer, they should either stay put or approve an increase in the debt ceiling on its own.
"I think we're very close to a deal, but as you know, these deals are complicated," he said.
Last week, Republican Senate Majority Leader Mitch McConnell said, "There will not be any question that we will raise the debt ceiling," but he did not predict when legislation to do so might clear Congress.
(Reporting by Jeff Mason; Editing by Dan Grebler)