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Trump administration, Congress have agreed on spending levels - Mnuchin

By David Lawder
FILE PHOTO: Treasury Secretary Steven Mnuchin testifies before the House Financial Services Committee hearing

By David Lawder

CHANTILLY, France (Reuters) - U.S. Treasury Secretary Steven Mnuchin said on Thursday that the Trump administration and congressional leaders have agreed on broad spending levels for the next two fiscal years, a key step towards approving a debt limit extension as U.S. borrowing capacity wanes.

Mnuchin told a news conference at a G7 finance leaders meeting in France that he hoped Congress could pass a comprehensive spending package including a debt limit hike before lawmkers' August recess to avoid cash flow problems that could begin in early September.

"We have actually now agreed on the spending numbers for both years, we're now working on offsets and certain structural issues and as part of this, we've agreed that there would be a long-term debt ceiling extension," Mnuchin said.

In a CNBC interview, he described the spending levels as "top-line" numbers, which would leave appropriations committees to allocate the funding.

If a full spending package cannot be passed by then, Mnuchin said he has asked Congress to at least pass a short-term debt ceiling extension. Under the Treasury's most conservative cash flow projections, the Treasury could experience funding problems in early September before lawmakers return to Washington, he added.

Mnuchin said he has been in daily conversations with congressional leaders from both parties and White House acting budget director Mick Mulvaney on the issue. At one point, he said he stepped out of the meeting with fellow G7 finance ministers and central bank governors to join conference calls on the spending issue.

Mnuchin added that he thought there was no appetite among either party to see the U.S. government shut down over lack of funding.

(Reporting by David Lawder; Editing by Chizu Nomiyama)