By Andrew Duehren, Kate Davidson and Catherine Lucey
WASHINGTON -- Congressional and White House negotiators reached
a deal to increase federal spending and raise the government's
borrowing limit, securing a bipartisan compromise to avoid a
looming fiscal crisis and pushing the next budget debate past the
2020 election.
The deal for more than $2.7 trillion in spending over two years,
which must still pass both chambers of Congress and needs President
Trump's signature, would suspend the debt ceiling until the end of
July 2021. It also raises spending by nearly $50 billion next
fiscal year above current levels.
The agreement forgoes the steep spending cuts initially sought
by the administration, providing for about $320 billion in spending
over two years above limits set in a 2011 budget law that
established automatic spending cuts, known as the sequester.
Mr. Trump, a Republican, announced the deal on Twitter late
Monday, citing all four congressional leaders. He added: "This was
a real compromise in order to give another big victory to our Great
Military and Vets!"
House Speaker Nancy Pelosi (D., Calif.) and Treasury Secretary
Steven Mnuchin negotiated the agreement for weeks, hoping to
complete a deal before the House leaves Washington at the end of
the week for August recess. Mr. Mnuchin had warned that the
government could exceed its borrowing limit as soon as early
September, before lawmakers return from recess.
In a joint statement Mrs. Pelosi and Sen. Chuck Schumer of New
York, the chamber's Democratic leader, pledged that the House would
bring the deal quickly to the floor. They stressed that the
agreement increases both defense and domestic spending and said
they had agreed to spending offsets that were part of an earlier
bipartisan agreement.
Senate Majority Leader Mitch McConnell (R., Ky.) said he was
encouraged by the deal, adding that it "secures the resources we
need to keep rebuilding our armed forces." He said he intended to
have the Senate vote on it before the chamber departs for
recess.
The deal marked a victory for congressional leaders and Mr.
Mnuchin, who had stressed that without action, the government could
exhaust its ability to keep paying its bills in early
September.
For President Trump, the deal pushes the debt-limit question out
beyond the 2020 election and provides a boost to military spending
that he can tout on the campaign trail. For congressional leaders,
it ensures an initial measure of stability and marks a win for the
kind of pragmatic deal making that has been in short order in
Washington in recent years.
The accord also marked another example of Washington's rising
tolerance for deficits, among both Democrats, who prize domestic
spending, and Republicans, who consistently seek more money for the
military.
A key sticking point in the negotiations was how to pay for the
cost of the spending increases. The deal extends small cuts to
Medicare beyond fiscal year 2027 and extends fees collected by
Customs and Border Protection, amounting to $77 billion worth of
savings to offset the cost. Those routine budget accounting moves
fall short of the $150 billion in spending cuts originally sought
by the administration.
The White House was represented in negotiations by Mr. Mnuchin,
but others in Mr. Trump's circle have been urging him to press for
greater spending cuts.
Fiscal hawks panned reports of the proposed deal Monday before
many of the details had been released, warning it could add
trillions of dollars more to projected government debt levels over
the next decade. The White House estimated this month that annual
deficits are on track to exceed $1 trillion this fiscal year
because of weaker federal revenue following the 2017 tax cut and
higher government spending under the current budget agreement.
"There was a time when Republicans insisted on a dollar of
spending cuts for every dollar increase in the debt limit," said
Maya MacGuineas, president of the Committee for a Responsible
Federal Budget. "It's hard to believe they are now considering the
opposite -- attaching $2 trillion of spending increases to a
similar-sized debt limit hike."
Some House Republicans had urged Mr. Trump to reject the deal
over the weekend, calling for more spending cuts. But Rep. Kevin
McCarthy of California, the top House Republican, praised the
increases in military spending.
"While this deal is not perfect, compromise is necessary in
divided government," he said.
Democrats said the expiration of the fiscal controls enacted in
2011 was an important victory.
"While the bipartisan deal represents a compromise, I am proud
that this agreement ends the senseless austerity imposed by the
Budget Control Act, " said House Appropriations Chairwoman Nita
Lowey (D., N.Y.)
The deal wasn't praised by all Democrats. Rep. Alexandria
Ocasio-Cortez (D.,N.Y.) tweeted skepticism about spending increases
and tax cuts for "corporations, contractors & the
connected."
Mrs. Pelosi has been clear that she wanted to reach an agreement
before Congress leaves for summer break. She has said she wants the
House to vote on the agreement on Thursday, before the chamber goes
on recess on July 26. The Senate doesn't take its break until Aug.
2.
Mr. Mnuchin took the lead negotiating on behalf of the
administration, working closely with Mrs. Pelosi. That appeared to
limit the roles of White House acting chief of staff Mick Mulvaney
and acting Office of Management and Budget Director Russ
Vought.
Once the agreement on overall spending levels passes Congress,
both chambers will still need to pass 12 individual bills to keep
the government open after Sept. 30. Lawmakers have indicated they
may need to pass some sort of stopgap funding measure to avoid a
shutdown and negotiate agreements on all of the remaining
bills.
Congressional leaders pledged to forego any "poison pills," or
measures that lawmakers include in appropriations bills that
advance partisan goals. House Democrats have included a number of
policy provisions aimed at canceling Trump administration
initiatives in the spending bills they advanced in their chamber
this year. Those measures were already unlikely to pass in the
GOP-controlled Senate.
While budget talks began earlier this year, they took on fresh
urgency after Mr. Mnuchin's warnings about the debt ceiling.
Without the ability to borrow, the government could begin to miss
payments on its obligations, such as Social Security and veterans
benefits or interest on the debt.
Leaders of both parties sought to pair the debt limit vote with
a broader spending agreement -- a move that creates an impetus for
Democrats to push for domestic spending increases and lets
Republicans avoid a difficult, stand-alone vote on raising the
borrowing limit.
An aide to the speaker said Mrs. Pelosi and Mr. Mnuchin spoke
three times on Sunday and Mr. Schumer joined one of the calls. On
Monday, they spoke in the morning and again in the late afternoon
before Mr. Mnuchin held a conference call with the four
congressional leaders to discuss any issues. During the call, Mr.
Mnuchin told the leaders that the president would tweet on the deal
within the hour.
Write to Andrew Duehren at andrew.duehren@wsj.com , Kate
Davidson at kate.davidson@wsj.com and Catherine Lucey at
catherine.lucey@wsj.com
(END) Dow Jones Newswires
July 22, 2019 20:47 ET (00:47 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.