/Trump and congressional leaders reach sweeping budget agreement

Trump and congressional leaders reach sweeping budget agreement

President Donald Trump

President Donald Trump announced the budget deal by tweet Monday afternoon. | Alex Brandon/AP Photo

Congress

The deal will add billions for Pentagon and domestic programs while extending the debt limit until 2021.

White House and congressional leaders on Monday clinched a sweeping fiscal deal to lift the nation’s debt limit and dramatically raise federal spending levels.

The agreement, negotiated by Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin, is expected to clear both chambers before the August recess — alleviating pressure ahead of a slew of high-stakes fiscal deadlines this fall.

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Trump announced the agreement by tweet, delivering an endorsement that could help convince reluctant Republicans in Congress to swallow the massive spending hikes.

“This was a real compromise in order to give another big victory to our Great Military and Vets!” Trump tweeted.

Democratic leaders released a statement shortly afterwards, noting that the bipartisan agreement “will enhance our national security and invest in middle class priorities that advance the health, financial security and well-being of the American people.”

The agreement would eliminate the threat of dual fiscal crises that have long been hanging over Washington — an unprecedented default on U.S. debt and massive across-the-board spending cuts that could paralyze key agencies.

Under the deal, the Pentagon’s budget would increase to $738 billion next fiscal year — a $22 billion increase that is far short of Trump’s demands but above what House Democrats had wanted to spend, according to multiple sources.

It would also increase nondefense spending to $632 billion — a $27 billion increase that marks a victory for Democrats, though the money will also have to cover extra Census costs as well as a shortfall in Veterans Affairs funding.

The deal emerged Monday afternoon after a flurry of talks between Pelosi and Mnuchin over the last week. Both Pelosi and Senate Minority Leader Chuck Schumer spoke to Munchin twice on Monday.

The final agreement came during a 5 p.m. conference call, which included Mnuchin, Pelosi, Schumer, Senate Majority Leader Mitch McConnell and House Minority Leader Kevin McCarthy. On the call, the congressional leaders agreed that Trump would announce the deal by tweet, and their own statements would follow.

Democratic leaders were quick to take a victory lap on the funding increases, stating that Democrats have “secured an increase of more than $100 billion in funding for domestic priorities since President Trump took office.”

But the deal also comes with new restrictions for Democrats in the next round of funding negotiations this fall: No “poison pill” riders. Under the agreement, Democrats won’t be able to push for policy priorities, like scrapping the so-called Hyde Amendment prohibition on using federal funds for abortion, or further restricting Trump’s use of Pentagon money for his border wall project until legal challenges on the issue are resolved.

Both are major compromises for the emboldened House Democratic caucus, which has already passed those provisions in their own party-line spending bills this year. And many are still fuming that Trump circumvented Congress last year in an attempt to divert funds to his border wall, a move that is still awaiting a final ruling in the courts.

Sen. Patrick Leahy (D-Vt.), the top Democrat on the Appropriations Committee, said he plans to oppose the agreement, calling it “the other people’s budget deal.”

“The way it is right now, I will not vote for it,” Leahy said Monday, citing concerns about the lack of funding for veterans and ability for Trump to move money around to fund his border wall. “The other 99 can vote for it.”

Congressional leaders want to pass the two-year deal before departing for a five-week recess at the end of the week, which means a vote likely this week in the House. The Senate is in session for another week.

McConnell, who was regularly briefed on the negotiations but not part of the back-and-forth, confirmed Monday he planned to bring up the deal for a vote before the August recess.

“I am very encouraged that the administration and Speaker Pelosi have reached a two-year funding agreement that secures the resources we need to keep rebuilding our armed forces,” McConnell wrote in a statement.

While neither side will be completely happy with the agreement, sources close to Mnuchin and Pelosi say it is a “real compromise” that gives both parties some of what they want while permanently ending the sequester requirement under the 2011 budget law. That law calls for $125 billion in automatic spending cuts if no new deal is reached.

The Mnuchin-Pelosi compact would boost “topline” spending levels to $1.37 trillion by the next fiscal year, roughly $50 billion higher than current levels. By fiscal 2021, total discretionary spending will increase to $1.375 trillion.

There will be approximately $77 billion in offsets as part of the agreement, a move designed to ameliorate concerns by Trump and GOP leaders. The pay-fors will come from familiar sources: Extending customs fees that are set to expire and extending the so-called “Medicare sequester,” according to people familiar with the deal.

That’s roughly half of the $150 billion in offsets sought by some in the White House last week. And all of the offsets have also been used to pay for previous budget deals.

The debt limit will be suspended until July 31, 2021, a major issue that Mnuchin, Hill leaders and Wall Street wanted to resolve. The two-year extension kicks the politically unpopular issue past next year’s presidential cycle, offering much-needed breathing room for both parties.

Republicans in Congress had said they needed firm assurances from Trump that he supports the bipartisan compromise before they agree to support the deal on the floor — and may require more than simply a tweet.

Some Senate Republican fear a repeat of the painful shutdown earlier this year, when a group of conservatives close to the president pushed him to reject a bipartisan compromise after the Senate had already taken a tough vote.

The compromise is only partly paid for, which has infuriated Congress’s few remaining fiscal hawks. Some Republican lawmakers, led by members of the House Freedom Caucus, are already urging Trump to veto the deal.

But the agreement also contains a big increase in Pentagon spending, likely to deliver votes from the majority of Republicans.

The House would vote on the deal as soon as this week, followed by the Senate, paving the way for Congress to consider its annual funding bills when lawmakers return from their August recess. Those bills need to pass by Sept. 30 to avert a government shutdown.

That includes the contentious bill to fund the Department of Homeland Security — which forced one-quarter of the U.S. government into a record shutdown earlier this year.

Congressional leaders are discussing a funding strategy that would avoid a giant “omnibus” bill that Trump has said he would reject.

The deal specifies that the White House and Congress will aim for “orderly and timely consideration” of funding bills for the next two years, aiming to avert another government shutdown or a massive omnibus.

Still, that could lead to a scenario where Congress, once again, passes its least controversial spending bills — like the Pentagon, the Education Department and veterans funding — while ignoring the most controversial.

Last fall, that meant agencies like DHS were left without funding for weeks, as part of the government’s longest shutdown.

Burgess Everett contributed to this story.

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