Trump, Congress Reach Agreement On 2-Year Budget Deal

Jul 23, 2019
Originally published on July 22, 2019 8:07 pm

Update at 6:22 p.m. ET

President Trump announced an agreement on a two-year budget deal and debt-ceiling increase.

The deal would raise the debt ceiling past the 2020 elections and set $1.3 trillion for defense and domestic spending over the next two years.

Congressional sources briefed on the deal said it would suspend the debt limit until July 31, 2021, and include parity in spending increases for defense and domestic programs. It would include about $77 billion in offsets for those spending increases.

House Speaker Nancy Pelosi and Senate Minority Leader Chuck Schumer said in a joint statement that the deal "will enhance our national security and invest in middle class priorities that advance the health, financial security and well-being of the American people."

Pelosi said the House would move quickly to send the legislation to Trump to sign "as soon as possible."

Up until Trump's tweet, there had been a lot of mixed signals coming out of the White House.

Trump made some vague, but encouraging comments about negotiations earlier on Monday during a meeting with the Pakistani prime minister.

"We're doing very well on debt limit ... and I think we're doing very well on the budget," the president said about his discussions with Pelosi and GOP leaders on Capitol Hill.

Shai Akabas, Bipartisan Policy Center's director of economic policy, said many people likely would not have felt confident until Trump himself said he supports the deal.

"At various times he has been on board with sort of the fiscally conservative side of wanting to cut spending in opposition to the Democrats priorities," Akabas said of Trump ahead of the announcement. "At some points, he's been wanting to be seen as the dealmaker in chief. He's also got the interest in making sure that we don't route the strong economy that we have right now. So there's a lot of different considerations I think that are being weighed in the administration in these negotiations."

The deal is likely to irritate nearly everyone on Capitol Hill, but that means it is also expected to pass as long as the president pledges to sign it. Republicans have generally resisted debt limit hikes and higher domestic spending without cuts, and Democrats will have to vote for raising defense spending to historic highs, a priority for this administration.

The upside is it is the last short-term budget deal necessitated to avoid automatic across-the-board spending cuts, known as sequester, enacted in a 2011 budget law that was intended to trim $1.2 trillion over the previous decade. The sequester expires in 2021.

Mnuchin has warned Congress that the debt ceiling — the nation's borrowing limit for spending it has already agreed to — would be hit in early September, earlier than anticipated. With Congress set to adjourn for August, Pelosi and Mnuchin had been in near-constant phone contact hammering out the details of a deal that could pass a divided Congress and be signed by Trump.

The House will pass the deal first as that chamber is scheduled to adjourn for the summer on Friday, and the Senate will take it up next week, before it does the same.

NPR White House correspondent Franco Ordoñez contributed to this report

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President Trump made it official on Twitter this evening. He and congressional leaders are announcing a budget deal to raise the debt limit and to set spending levels for the next two years. NPR congressional correspondent Susan Davis is here with more details.

Hi, Sue.


SHAPIRO: What are the main selling points of this deal?

DAVIS: I think the major headline is that they've agreed to suspend the debt ceiling until July 21, 2021. That means it takes it off the table for the presidential election. The debt limit - always important to remember - is the nation's borrowing authority. It is, essentially, the nation's credit card. And it is for programs for spending the government has already agreed to. It is not for new spending. In terms of new spending, it will include about $1.3 trillion in annual spending for the Pentagon and all of our domestic spending programs. How do they pay for that in this deal? There's only about $75 billion - only 75 billion - $77 billion in offsets to offset some of those spending costs.

SHAPIRO: Seventy-five billion to offset 1.3 trillion.

DAVIS: Yeah. It's really a drop in the bucket. And I think we're going to hear a lot of talk about the national debt in the terms of this deal. The debt has crossed $22 trillion. It's not going down, and the trajectory of this would add about another 1.5- to $2 trillion until July of 2021.

SHAPIRO: Sounds like that will make it difficult for lawmakers to vote for.

DAVIS: Yeah. I mean, when everybody's grouchy, a deal is usually close by...


DAVIS: ...Close in hand. Republicans aren't going to like voting for another debt limit increase, especially because they didn't have anywhere near the offsets they wanted in it. Democrats don't like it either, especially because it's coming up. The debt limit has approached so quickly because of the 2017 tax cuts. The government isn't taking in as much revenue, and we're reaching our debt limits faster, which is contributing to the deficit. I do think the upside of this deal and how I think both sides are going to sell it is it does bring some certainty to the economy and to the federal government. The markets are assured that there will not be a default. The debt limit's set to be hit in early September. A two-year budget deal is sending the message - at least the hopeful message - that there will not be threats of government shutdowns and shutdown politics for the remainder of Trump's term in office.

SHAPIRO: Leaders of both parties and President Trump are behind it. Does that guarantee that there won't be some kind of grassroots insurgence from the members who might want to vote against it?

DAVIS: Yeah. I mean, members are going to have the chance over the next couple of days to review this deal. This was really cut at the senior level. Rank-and-file members are just being briefed on this deal too. You know, with the president on board, Republicans are probably going to rally in enough support to get behind them, ditto Nancy Pelosi. She can usually bring along enough Democrats. Mitch McConnell has already said that he has an agreement with the Minority Leader Chuck Schumer to sort of use expedited measures to get this through the Senate next week. Trump is always a wild card. I mean, how many times do I have to say this? But he does seem on track for this. And also within this agreement, they have agreed to this year's spending - all four principles to say they won't mess with this year's appropriations bills - no poison pills, no riders. Let's get it done. Let's do it clean.

SHAPIRO: You said no poison pills, no riders.

DAVIS: Yeah.

SHAPIRO: In the recent past, there has been, like, a government shutdown over this fight tied to whether there would be funding for a border wall...

DAVIS: Yeah.

SHAPIRO: ...For example. How did all that get pushed aside this time?

DAVIS: I think that everyone just wants to get past the election. And I think there is a little bit of mutual disarmament in this deal to say, let's play it cool. Let's get past 2020, and we can re-begin the fight.

SHAPIRO: Pick up the fights again then.

DAVIS: Exactly. There will be more budget fights to come in our lives, Ari.

SHAPIRO: (Laughter) NPR congressional correspondent Susan Davis, thanks a lot.

DAVIS: You're welcome. Transcript provided by NPR, Copyright NPR.