WASHINGTON (AP) - Treasury Secretary Steven Mnuchin said Thursday that negotiators have reached an agreement on the core elements of a deal to increase the government’s borrowing cap and set a $1.3 trillion overall level for the agency budgets that Congress passes each year.

He told CNBC’s “Squawk Box” that talks with House Speaker Nancy Pelosi, D-Calif., have settled on a debt limit increase that would cover two years. There was agreement also on spending levels, but he did not go into detail.

Still to be resolved are offsetting spending cuts to help finance the deal and other “structural issues,” Mnuchin said. The Trump administration is pressing for up to $150 billion in such cuts, well above a figure that would be easy to quickly negotiate.

“The good news is we’ve reached an agreement between the administration, the House and the Senate on top line numbers for both year one and year two,” Mnuchin said, speaking from France, where he was at an economic summit. “We’re now discussing offsets as well as certain structural issues, and we’ve agreed as a part of that deal there would be a long-term two-year debt ceiling increase.”

At issue are two separate but pressing items on Washington’s must-do agenda: increasing the debt limit to avert a first ever default on U.S. payments and acting to set overall spending limits and prevent automatic spending cuts from hitting the Pentagon and domestic agencies in January.

Pelosi and Mnuchin spoke by phone again Thursday, Pelosi told reporters.

“Our conversations are continuing. We’ve been very firm though about a decision. If they want us to have this done by before we leave we have to come to a conclusion pretty soon,” Pelosi said.

Reaching an agreement also eliminates the possibility of a repeat government shutdown when the current budget year ends Sept. 30. President Donald Trump ended up on the losing end of a record 35-day partial shutdown last December and January.

“Nobody wants a shutdown in any scenario,” said Mnuchin, who taking the lead for the administration in negotiations.

Conservative forces in the White House and among House Republicans do not like the way the deal is shaping up.

Democrats, Senate Republicans, and pro-Pentagon Republicans form the core of a powerful coalition favoring a deal. But House conservatives that comprise the heart of Trump’s base in Congress are wary of the emerging agreement and warn that Trump may reject a deal that doesn’t have their support. The alternative is to run the government on autopilot, a prospect that alarms the Pentagon and its allies.

“If we can get a decent number and a two-year deal and all the stability that goes with that - and if we can do that now - that will be more valuable than a somewhat higher number … in December,” said Rep. Mac Thornberry of Texas, top Republican on the House Armed Services Committee.

The talks have gone on for weeks but took on new urgency as deficit estimates worsened, creating an unacceptable risk of default in early to mid-September. Mnuchin said the risk of a debt default in September is relatively low, limited to the Treasury Department’s “most conservative scenario.”

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