ALL NEWS

Deal sealed on federal budget ensures no shutdown, default

Jul 23, 2019, 6:04 AM

Speaker of the House Nancy Pelosi, D-Calif., holds a news conference on Capitol Hill in Washington,...

Speaker of the House Nancy Pelosi, D-Calif., holds a news conference on Capitol Hill in Washington, Wednesday, July 17, 2019. (AP Photo/J. Scott Applewhite)

(AP Photo/J. Scott Applewhite)

WASHINGTON (AP) — President Donald Trump and congressional leaders have announced a critical debt and budget agreement that’s an against-the-odds victory for Washington pragmatists seeking to avoid political and economic tumult over the possibility of a government shutdown or first federal default.

The deal, announced Monday by Trump on Twitter and in a statement by Democratic House Speaker Nancy Pelosi and Senate Democratic leader Chuck Schumer, will restore the government’s ability to borrow to pay its bills past next year’s elections and build upon recent large budget gains for both the Pentagon and domestic agencies.

“I am pleased to announce that a deal has been struck,” Trump tweeted, saying there will be no “poison pills” added to follow-up legislation. “This was a real compromise in order to give another big victory to our Great Military and Vets!”

The agreement is on a broad outline for $1.37 trillion in agency spending next year and slightly more in fiscal 2021. It would mean a win for lawmakers eager to return Washington to a more predictable path amid political turmoil and polarization, defense hawks determined to cement big military increases and Democrats seeking to protect domestic programs.

Nobody notched a big win, but both sides view it as better than a protracted battle this fall.

Pelosi and Schumer said 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.” Top congressional GOP leaders issued more restrained statements stressing that the deal is a flawed but achievable outcome of a government in which Pelosi wields considerable power.

“While this deal is not perfect, compromise is necessary in divided government,” said House Minority Leader Kevin McCarthy, R-Calif.

However, it also comes as budget deficits are rising to $1 trillion levels — requiring the government to borrow a quarter for every dollar the government spends — despite the thriving economy and three rounds of annual Trump budget proposals promising to crack down on the domestic programs that Pelosi is successfully defending now. It ignores warnings from deficit and debt scolds who say the nation’s fiscal future is unsustainable and will eventually drag down the economy.

“This agreement is a total abdication of fiscal responsibility by Congress and the president,” said Maya MacGuineas, president of the Committee for a Responsible Federal Budget, a Washington advocacy group. “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.”

A push by the White House and House GOP forces for new offsetting spending cuts was largely jettisoned, though Pelosi, D-Calif., gave assurances about not seeking to use the follow-up spending bills as vehicles for aggressively liberal policy initiatives.

The head of a large group of House GOP conservatives swung against the deal.

“No new controls are put in place to constrain runaway spending, and a two-year suspension on the debt limit simply adds fuel to the fire,” said Republican Study Committee Chairman Mike Johnson, R-La. “With more than $22 trillion in debt, we simply cannot afford deals like this one.”

Fights over Trump’s U.S.-Mexico border wall, other immigration-related issues and spending priorities will be rejoined on spending bills this fall that are likely to produce much the same result as current law. The House has passed most of its bills, using far higher levels for domestic spending. Senate measures will follow this fall, with levels reflecting the accord.

At issue are two separate but pressing items on Washington’s must-do agenda: increasing the debt limit to avert a first-ever default on U.S. payments and acting to set overall spending limits and prevent $125 billion in automatic spending cuts from hitting the Pentagon and domestic agencies with 10 percent cuts starting in January.

The threat of the automatic cuts represents the last gasp of a failed 2011 budget and debt pact between former President Barack Obama and then-Speaker John Boehner, R-Ohio, that promised future spending and deficit cuts to cover a $2 trillion increase in the debt. But a bipartisan deficit “supercommittee” failed to deliver, and lawmakers were unwilling to live with the follow-up cuts to defense and domestic accounts. This is the fourth deal since 2013 to reverse those cuts.

Prospects for an agreement, a months-long priority of top Senate Republican Mitch McConnell, R-Ky., became far brighter when Pelosi returned to Washington this month and aggressively pursued the pact with Treasury Secretary Steven Mnuchin , who was anointed lead negotiator instead of more conservative options like acting White House Chief of Staff Mick Mulvaney or hardline Budget Director Russell Vought.

Mnuchin was eager to avert a crisis over the government’s debt limit. There’s some risk of a first-ever U.S. default in September, and that added urgency to the negotiations.

The pact would defuse the debt limit issue for two years, meaning that Trump or his Democratic successor would not have to confront the politically difficult issue until well into 2021.

Washington’s arcane budget rules give each side a way to paint the numbers favorably. Generally speaking, the deal would lock in place big increases won by both sides in a 2018 pact driven by the demands of GOP defense hawks and award future increases consistent with low inflation.

Pelosi and Schumer claimed rough parity between increases for defense and nondefense programs, but the veteran negotiator retreated on her push for a special carve-out for a newly reauthorized program for veterans utilizing private sector health care providers. Instead non-defense spending increases would exceed increases for the military by $10 billion over the deal’s two-year duration.

In the end, non-defense appropriations would increase by $56.5 billion over two years, giving domestic programs 4% increases on average in the first year of the pact, with a big chunk of those gains eaten up by veterans increases and an unavoidable surge for the U.S. Census. Defense would increase by $46.5 billion over those two years, with the defense budget hitting $738 billion next year, a 3% hike, followed by only a further $2.5 billion increase in 2021.

Trump retains flexibility to transfer money between accounts, which raises the possibility of attempted transfers for building border barriers. That concession angered the Senate’s top Appropriations Committee Democrat, Patrick Leahy of Vermont, who said he has “many concerns” with a memorandum outlining the agreement that promised there will also be no “poison pills,” new policy “riders,” or bookkeeping tricks to add to the deal’s spending levels.

The results are likely to displease some on both sides, especially Washington’s weakening deficit hawks and liberals demanding greater spending for progressive priorities. But Pelosi and McConnell have longtime histories with the Capitol’s appropriations process and have forged a powerful alliance to deliver prior spending and debt deals.

The measure would first advance through the House this week and win the Senate’s endorsement next week before Congress takes its annual August recess. Legislation to prevent a government shutdown will follow in September.

We want to hear from you.

Have a story idea or tip? Send it to the KSL NewsRadio team here.

All News

pets...

Curt Gresseth

Don’t surrender pets to a shelter. Send in a pro to reverse bad behavior, says Utah trainer

An expert discusses controlling the unwanted behavior of pets.

22 minutes ago

Exclusive video obtained by KSL NewsRadio shows Salt Lake hit-and-run in the Avenues neighborhood. ...

Eric Cabrera

WATCH: Exclusive video shows woman survives Salt Lake City hit and run

KSL NewsRadio has exclusively obtained footage of a Salt Lake City hit-and-run, where a woman was struck while out for a run in the Avenues.

26 minutes ago

Defense attorney John Prior questions David Warwick during Chad Daybell's preliminary hearing in Fr...

Emma Keddington

Judge orders gag order for upcoming Chad Daybell case

Judge Steven Boyce has issued a gag order in the Chad Daybell case, after Daybell's attorney spoke with a media outlet.

50 minutes ago

colorado river...

Adam Small

More than half of the Colorado River’s water is being used for farming, study finds

The Colorado River provides water to 40 million people in seven states, including Utah, as well as Mexico.

58 minutes ago

12 year old driver shown driving erratically on freeway...

Sam Herrera

WATCH: Police release dash cam footage of 12-year-old driver

The Utah Highway Patrol said the 12-year-old driver stole her mom's car. The girl was briefly arrested before being released to her parents.

3 hours ago

A bus carrying Easter worshippers fell off a cliff, killing 45 people in the Mamatlakala mountain p...

Amy Cassidy, CNN

Bus carrying Easter worshippers falls off cliff killing 45 people in South Africa

An eight-year-old girl who survived the bus crash in South Africa has been airlifted to hospital according to local media.

3 hours ago

Sponsored Articles

Mother and cute toddler child in a little fancy wooden cottage, reading a book, drinking tea and en...

Visit Bear Lake

How to find the best winter lodging in Bear Lake, Utah

Winter lodging in Bear Lake can be more limited than in the summer, but with some careful planning you can easily book your next winter trip.

Happy family in winter clothing at the ski resort, winter time, watching at mountains in front of t...

Visit Bear Lake

Ski more for less: Affordable ski resorts near Bear Lake, Utah

Plan your perfect ski getaway in Bear Lake this winter, with pristine slopes, affordable tickets, and breathtaking scenery.

front of the Butch Cassidy museum with a man in a cowboy hat standing in the doorway...

Bear Lake Convention and Visitors Bureau

Looking Back: The History of Bear Lake

The history of Bear Lake is full of fascinating stories. At over 250,000 years old, the lake has seen generations of people visit its shores.

silhouette of a family looking over a lake with a bird in the top corner flying...

Bear Lake Convention and Visitors Bureau

8 Fun Activities To Do in Bear Lake Without Getting in the Water

Bear Lake offers plenty of activities for the whole family to enjoy without having to get in the water. Catch 8 of our favorite activities.

Wellsville Mountains in the spring with a pond in the foreground...

Wasatch Property Management

Advantages of Renting Over Owning a Home

Renting allows you to enjoy luxury amenities and low maintenance without the long-term commitment and responsibilities of owning a home.

Clouds over a red rock vista in Hurricane, Utah...

Wasatch Property Management

Why Southern Utah is a Retirement Paradise

Retirement in southern Utah offers plenty of cultural and recreational opportunities. Find out all that this region has to offer.

Deal sealed on federal budget ensures no shutdown, default