By Andrew Duehren 

Congressional negotiators and the White House reached an agreement Monday evening to raise federal spending over the next two years and suspend the debt-ceiling until the end of July 2021. Neither Republicans nor Democrats won everything they wanted.

Here are five key compromises in the deal:

Nonmilitary Spending

The bill, which allows for more than $2.7 trillion in discretionary spending over the next two fiscal years, sets domestic spending levels below what House Democrats had initially sought this year. In the spending legislation they passed in their own chamber, Democrats set nonmilitary spending at $639 billion for fiscal year 2020, which begins on Oct. 1.

The agreement reached yesterday provides for $632 billion in nonmilitary funding for next fiscal year, with $2.5 billion of those funds designated for conducting the decennial census. By fiscal year 2021, domestic spending will grow to $634.5 billion.

Military Spending

House Democrats aren't the only ones accepting less money for their favored priorities. Under the deal, the military will receive $738 billion in overall funding next fiscal year -- below the $750 billion Senate Republicans had proposed in the defense authorization bill they passed earlier this year. But $738 billion is also above the $733 billion to which Democrats had agreed in the House.

While Sen. Jim Inhofe (R., Okla.), the chairman of the Senate Armed Services Committee, said in a statement he was "disappointed that the top-line total for defense funding isn't $750 billion," he added that the compromise was critical to pass.

The End of Spending Limits

The legislation doesn't extend the fiscal controls enacted in 2011 to reign in federal deficits beyond fiscal year 2021. After that they will expire. During the negotiations, members of the Trump administration had proposed extending the spending limits to achieve future savings as part of the agreement.

In the end, the bill sets spending about $320 billion above the limits set in the 2011 law. That will amount to a nearly $50 billion increase next fiscal year compared with this year.

"Democrats have achieved an agreement that permanently ends the threat of the sequester," House Speaker Nancy Pelosi and Senate Minority Leader Chuck Schumer (D., N.Y.) said in a statement, referring to the spending limits set in the 2011 law. "We are pleased that the Administration has finally agreed to join Democrats in ending these devastating cuts."

Adjustments

In their own spending legislation, House Democrats had set aside $7.5 billion to pay for conducting the census in 2020, hoping to adjust overall spending levels for that program in particular. The deal does include a one-year adjustment for the census, but it is for $2.5 billion, below the level initially sought by Democrats.

Spending Cuts

At one point in the talks, the Trump administration sent to Mrs. Pelosi a list of nearly $574 billion in potential cuts to offset the cost of the agreement. The administration indicated it wouldn't accept any agreement that didn't make at least $150 billion in cuts to pay for the two-year deal.

The bill will achieve roughly $77 billion in savings to offset the cost of the deal. Instead of making new cuts, it does that by extending mandatory spending limits and customs fees beyond fiscal year 2027 -- both routine provisions have been used to offset the cost of previous budget deals.

Write to Andrew Duehren at andrew.duehren@wsj.com

 

(END) Dow Jones Newswires

July 23, 2019 11:57 ET (15:57 GMT)

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