Trump and Congress reach 2-year budget deal
$1.37T pact will raise the debt ceiling for two years, avoid shutdown.
— President WASHINGTON
Donald Trump and congressional leaders announced late Monday they had struck a cr itical debt and budget agreement. The deal amounts to an against-the- odds victory for Washing- ton pragmatists seeking to avoid politically dangerous tumult over the possibility of a government shutdown or first-ever federal default.
The deal, announced by Trump on Twitter and in a statement by Democratic House Speaker Nancy Pelosi and Senate Democratic leader Chuck Schumer, will restore the government’s ability to borrow to pay its bills past next year’s elec- tions and build upon recent large budget gains for both the Pentagon and domestic agencies.
“I am pleased to announce that a deal has been struck,” Trump tweeted, saying there will be no “poison pills” added to follow-up legislation. “This was a real compromise in order to give another big victory to our Great Military and Vets!”
Pelosi and Schumer said the deal “will enhance our national security and invest in middle class priorities that advance the health, finan- cial security and well-being of the American people.”
They claimed credit for winning more than $100 billion worth of spending increases for domestic prior- ities since Trump took office.
The agreement is on a broad outline for $1.37 tril- lion in agency spending next year and slightly more in fiscal 2021. It would mean a win for lawmakers eager to return Washington to a more predictable path amid polit- ical turmoil and polarization, defense hawks deter- mined to cement big mil- itary increases and Dem- ocrats seeking to protect domestic programs.
Nobody can claim a big win, but both sides view it as better than a protracted battle this fall that proba- bly wouldn’t end up much differently.
However, it also comes as budget deficits are rising to $1 trillion levels — requiring the government to borrow a quarter for every dollar spent — despite the thriving economy and three rounds of annual Trump budget proposals promising to crack down on the domestic programs that Pelosi is successfully defending now. It ignores warnings from deficit and debt scolds who say the nation’s fiscal future is unsustainable and will eventually drag down the economy.
Fights over Trump’s U.S.-Mexico border wall, other immigration-related issues and spending priorities will be rejoined on follow-up spending bills that are likely to produce much the same result as current law. The House has passed most of its bills, using far higher levels for domestic spend- ing. Senate measures will follow this fall, with levels reflecting the accord.
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.
Prospects for an agreement, a priority of top Senate Republican Mitch McConnell, R-Ky., became far brighter when Pelosi aggressively pursued the pact with Treasury Secretary Steven Mnuchin.
Mnuchin was eager to avert a crisis over the government’s debt limit. There’s some risk of a first-ever U.S. default in September, and that added urgency to the negotiations.
The pact would defuse the debt limit issue for two years, meaning that Trump or his Democratic successor would not have to confront the politically difficult issue until well into 2021.
Pelosi was positioned to claim rough parity between increases for defense and non defense programs, but the veteran negotiator retreated on her push for a special carve-out for a newly reauthorized program for veterans utilizing private sector health care providers.
In the end, domestic programs would on average receive 4% increases in the first year of the pact, with much of those gains eaten up by veterans increases and an unavoidable surge for the U.S. Census. Defense would jump to $738 billion next year, a 3% hike.
Trump retains flexibility to transfer money between accounts, which raises the possibility of attempted transfers for building border barriers.
The measure would first advance through the House this week and win the Senate’s endorsement next week before Congress takes its annual August recess.