Congress and White House Strike a Rare Budget Compromise

August 8, 2019

In rare bipartisan fashion, the Democrats and the White House struck a two-year budget deal that increases spending and raises the debt ceiling, potentially averting an economic crisis. The bill (H.R. 3877) passed the House in a 284-149 vote, the Senate final vote was 67-28 and on Friday, August 2, 2019, the President signed the bill into law.

The two-year deal offers incentives to both parties in that Republicans win increases in military spending and averted a potential standalone partisan vote on the debt ceiling, while Democrats got a boost in funding for domestic programs. The deal avoids uncertainty of potential default on debt and the automatic spending cuts under the sequester that would begin early next year without a deal by October 1.

Negotiations were led by Speaker Pelosi and Treasury Secretary Mnuchin and suspends the debt ceiling until the end of July 2021. The agreement would raise defense spending to $738 billion in FY2020 and $740 billion in FY2021. Non-defense spending would be $632 billion and $634.5 billion for the 2020 and 2021 fiscal years, respectively. The deal adds an estimated $1.7 trillion to the deficit over the next ten years compared to spending cuts that would have kicked in under the sequester without a deal – the country would face sequester level spending in January which would result in about $71 billion in budget cuts to defense spending and $55 billion in cuts to domestic programs.

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