US President Donald Trump and congressional leaders on Monday announced a critical debt and budget agreement that is an against-the-odds victory for Washington pragmatists seeking to avoid political and economic tumult over the possibility of a government shutdown or first-ever federal default.
The deal, announced by Trump on Twitter and in a statement by Democratic House of Representatives 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 would 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!” he added.
Photo: Reuters
The agreement is on a broad outline for US$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 Republican 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,” House Minority Leader Kevin McCarthy said.
However, it also comes as budget deficits are rising to US$1 trillion levels — requiring the government to borrow a quarter for every dollar it 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.
A push by the White House and House Republican forces for new offsetting spending cuts was largely jettisoned, though Pelosi 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 Republican 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,” Republican Study Committee Chairman Mike Johnson said.
“With more than US$22 trillion in debt, we simply cannot afford deals like this one,” he said.
There is some risk of a first-ever US default in September, and that added urgency to the negotiations.
The pact would defuse the debt limit issue for two years.
The measure will 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.
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