Trump announces budget deal with Pelosi
WASHINGTON — President Donald Trump has once again shoved aside past Republican orthodoxy on debt and spending as he announced a budget deal with House Speaker Nancy Pelosi that likely ushers in a return to trillion-dollar deficits.
Trump once said he would eliminate the $22 trillion federal debt, but the annual budget deficit is on track to top $1 trillion a year — swollen by bipartisan spending increases and his tax cuts — with no real expectation of a change in trajectory any time soon.
The deal, which still must clear Congress, ends the automatic budget cuts enacted as a result of a showdown over the debt limit in 2011, when the new Republican majority in the House held federal borrowing authority hostage until President Barack Obama agreed to a spending straitjacket.
The automatic spending cuts known as the sequester were intended to provide an incentive to cut a bipartisan grand bargain on reducing the national debt, but those efforts were buried long ago.
Under the terms of the agreement, Republicans managed to secure $738 billion in defense spending for 2020 and $741 billion for 2021, including funds for overseas operations that aren't subject to budget caps, while Democrats got $632 billion in 2020 and $635 billion in 2021 for domestic spending. That amounts to $320 billion boost in spending over two years compared to lower budget caps that would have slashed spending at the end of this year.
Trump has given a nod to budget cutting, but since taking office he's mostly cowed Republican deficit hawks into silence by prioritizing funding the Defense Department and cutting taxes.
Pelosi, meanwhile, has maneuvered to increase spending on domestic discretionary programs by more than $100 billion since Trump took office. INCENTIVES
Both sides have political incentives to let the federal dollars flow.
For a Republican president whose focus has shifted to his reelection bid, the deal helps safeguard his strongest asset: the roaring U.S. economy. With this deal, market concerns about the government hitting the debt ceiling will be delayed until well past the 2020 election, as would any threat of automatic spending cuts at the end of this year that might crimp growth.
Trump has proposed huge spending cuts in each of his budgets — which were largely ignored by lawmakers of both parties — and this deal shelves any effort at belt-tightening until Trump's second term or a Democratic president takes office.
The president is already touting the fact that the deal would bring record defense spending, something that appeals to defense hawks in his party.
"I think the president realizes that he's not going to sacrifice the security of this nation to please a few people," said Senate Appropriations Chairman Richard Shelby, an Alabama Republican. Shelby noted the GOP needs Democratic votes to pass the budget deal and they won't support cutting social programs.