White House and Lawmakers Agree to Two-Year Budget Deal

President Trump announced late Monday the administration had reached an agreement with House and Senate leaders to lift spending caps and raise the debt ceiling with a two-year budget deal.

The deal would raise discretionary spending at non-defense agencies by $27 billion in fiscal 2020 and boost defense spending by $22 billion, according to multiple reports. Compared to fiscal 2019, domestic agencies would see an increase of $10 billion more than their defense counterparts. Compared to the spending caps that would have been in place absent a deal, defense spending is set to increase by $20 billion more than the boost to non-defense. The funding caps, which first went into effect in 2013 as a result of the 2011 Budget Control Act, will no longer apply going forward. 

The deal avoids $125 billion in automatic spending cuts that would have taken place in fiscal 2020 across both defense and non-defense agencies had Congress not acted. Lawmakers agreed to offset about $77 billion through increases to customs user fees and extending automatic cuts to mandatory spending. 

“Importantly, Democrats have achieved an agreement that permanently ends the threat of the sequester," House Speaker Nancy Pelosi, D-Calif., and Senate Minority Leader Chuck Schumer, D-N.Y., said in a joint statement. "With this agreement, we strive to avoid another government shutdown, which is so harmful to meeting the needs of the American people and honoring the work of our public employees." 

Congressional Democrats said they will now work with Republicans to quickly pass appropriations bills to set line-by-line funding at agencies across government that fall in line with the new deal. They will attempt to do so with separate spending bills, rather than by merging all 12 must-pass measures into one omnibus.

“The president, congressional leaders and the leadership of the Appropriations Committees shall work together to reach bicameral and bipartisan agreement on the orderly and timely consideration of FY 2020 appropriations bills to avoid a government shutdown, and a 12-bill omnibus,” Schumer and Pelosi wrote in a summary of the agreement. 

House Minority Leader Kevin McCarthy, R-Calif., bemoaned the deal for not including more spending reductions to offset its costs, but still called for its passage. 

“While this deal is not perfect, compromise is necessary in divided government," McCarthy said. "Speaker Pelosi should put this on the floor so the president can sign it into law.”

The agreement contains “no poison pills,” Trump said, suggesting it would receive sufficient support from both Democrats and Republicans to pass both chambers. 

....This was a real compromise in order to give another big victory to our Great Military and Vets!

— Donald J. Trump (@realDonaldTrump) July 22, 2019

The bill reportedly would raise spending caps by $320 billion, a tough sell for fiscal conservatives. Likewise, many Democrats will have trouble with the fact that it wouldn’t prevent the administration from using funds to build a wall on the southwest border.

Maya MacGuineas, president of the Committee for a Responsible Federal Budget, said, “As we understand it, this agreement is a total abdication of fiscal responsibility by Congress and the president. It may end up being the worst budget agreement in our nation’s history, proposed at a time when our fiscal conditions are already precarious.”

If this deal passes, the administration will have increased discretionary spending by as much as 22 percent over President Trump’s first term, and enshrine trillion-dollar deficits into law, MacGuineas said.