President Donald Trump and Senate Minority Leader Chuck Schumer have agreed to pursue a deal that would permanently remove the requirement that Congress repeatedly raise the debt ceiling, three people familiar with the decision said.
Trump and Schumer discussed the idea Wednesday during an Oval Office meeting. Schumer, Trump and House Minority Leader Nancy Pelosi, D.-Calif., agreed to work together over the next several months to see if they can finalize a plan, which would need to be approved by Congress.
One of the people familiar described it as a "gentlemen's agreement."
Senate Democrats are hopeful they can finalize an arrangement with Trump by December.
"The President encouraged Congressional leaders to find a more permanent solution to the debt ceiling so the vote is not so frequently politicized," said White House press secretary Sarah Huckabee Sanders.
The three people spoke on condition of anonymity because they were not authorized to discuss the contents of the meeting.
Another person familiar with the meeting said Vice President Mike Pence was open to changes he viewed as in line with the so-called "Gephardt Rule"- a parliamentary rule making it easier to tie raising the debt ceiling with Congress passing a budget. The rule is named after Dick Gephardt, the former Missouri Democratic lawmaker who served as House Majority leader.
The U.S. government spends more money than it brings in through taxes and fees, and it covers that gap by issuing debt to borrow money. The government can only borrow money up to a certain limit, known as the debt limit or the debt ceiling. The government routinely bumps up against this ceiling, requiring Congress to raise it again and again. These votes are often politicized and can cause panic among investors.
If the debt ceiling isn't raised, investors have warned that the stock market could crash because the government could fall behind on its obligations if it isn't allowed to borrow more money.
Treasury Secretary Steven Mnuchin has suggested scrapping the existing debt limit process and replacing it with a process that automatically lifts the borrowing limit every time Congress appropriates future spending.
The White House did not immediately respond to requests for comment.