WASHINGTON ― President Donald Trump announced the completion of a deal on spending caps and a higher debt limit on Monday, potentially avoiding the economic brinkmanship and government shutdown headaches that have plagued Congress the last several years.
Trump said in a tweet that congressional leaders had struck the deal ― with no “poison pill” amendments meant to sink the agreement ― after months of negotiation between Speaker Nancy Pelosi (D-Calif.) and Treasury Secretary Steve Mnuchin. The deal would raise current government spending caps by about $50 billion this year and $54 billion more the next year, as well as increase the debt ceiling for another two years.
The agreement will clear the way for further legislation to avoid a government shutdown and will avoid a last-minute standoff on the debt ceiling, which is set to expire in early- to mid-September. Had lawmakers not reached an agreement on the debt limit, the United States would have begun defaulting on loans, and Mnuchin would have had to make decisions about which obligations ― such as federal employer salaries, debt interest payments or Social Security benefits ― the government would pay.
The Senate has been unable to advance appropriations bills without knowing the overall caps on funding.
But with the two-year agreement to raise spending limits, the Senate can move forward with its bills, which will help House and Senate appropriators write the final spending legislation needed to avert a government shutdown when current funding runs out on Oct. 1. Under the deal, non-defense spending will get an additional $27 billion this year beyond the spending caps and an additional $29.5 billion the year after, while defense spending will get a $22 billion increase in fiscal 2020 and a $24.5 billion increase in fiscal 2021.
In a statement Monday night, Pelosi and Senate Minority Leader Chuck Schumer (D-N.Y.) noted that they had insisted on at least getting dollar-for-dollar increases in defense and non-defense but actually got more than parity.
“We are pleased that our increase in non-defense budget authority exceeds the defense number by $10 billion over the next two years,” Pelosi and Schumer said. “It also means Democrats secured an increase of more than $100 billion in funding for domestic priorities since President Trump took office.”
In the final week of negotiation, Pelosi was able to talk the administration down from demanding $150 billion in spending cuts to offset the increases to $75 billion, with the expectation that most of those “offsets” won’t actually cut spending. Due to budgeting gimmicks, such as accounting for cuts in future years, Congress can say it plans to make spending cuts in the future for the spending increases now.
But the reality is those cuts are very unlikely to ever take place. With the two-year agreement, lawmakers effectively negate the Budget Control Act, legislation signed in 2011 laying out spending levels for the next decade. Congress never really abided by those limits.
While Trump announced the deal on Monday, many specifics on the legislation are still unknown. A source on Monday told HuffPost that the last hurdle in the negotiations were those “poison pill” riders, including amendments proposed by Democrats to prevent Trump from spending defense money on a border wall or getting rid of the prohibition on using federal money for abortion procedures.
Democratic aides were already selling the deal Monday evening by noting that the agreement is to not add any new policy riders.
Those sacrifices are likely to upset many progressives who may vote against the deal over the agreement not blocking Trump’s use of emergency funds for a wall, but conservatives may also balk at the spending, which is far above the caps Republicans demanded in 2011.
With the tentative agreement, however, the House and Senate can quickly pass the legislation to raise the debt ceiling before lawmakers leave for their August break next week, giving Senate appropriators plenty of time to write spending measures over the break and then pass them to avoid a government shutdown.
While Trump signaled his support for the deal, there’s no guarantee that things won’t go off the rails, either with the spending bills still to come or even with this agreement. Trump could easily sense a blowback from conservatives on raising the debt limit and spending and reverse himself, as he’s done in the past.
But for now, the deal will quell concerns in Congress and on Wall Street that Capitol Hill and the White House are no longer capable of reaching an agreement.
Pelosi and Schumer said in their statement that the House would move quickly to get the legislation to the president’s desk.