Two-year budget pact clears Senate, ending fiscal 2020 impasse

President Donald Trump has said he’ll sign the measure when it lands on his desk

Sen. Mitt Romney, R-Utah, leaves the Capitol on Thursday, Aug. 1, 2019, after clearing a two-year budget pact that ends a fiscal 2020 impasse. (Bill Clark/CQ Roll Call)
Sen. Mitt Romney, R-Utah, leaves the Capitol on Thursday, Aug. 1, 2019, after clearing a two-year budget pact that ends a fiscal 2020 impasse. (Bill Clark/CQ Roll Call)
Posted August 1, 2019 at 11:53am

The Senate cleared legislation Thursday that would set topline spending levels for the next two fiscal years and suspend the debt limit through July 2021, clearing the way for appropriators to begin work two months before the new fiscal year begins.

The 67-28 Senate vote came just before lawmakers left town for the August recess and follows a 284-149 House vote last week before that chamber left town for its summer break.

[Lawmakers to confront new post-spending caps reality]

The legislation now heads to President Donald Trump’s desk, where he’s expected to sign it despite the “monstrous addition of debt” that would result, as Trump ally Rand Paul, R-Ky., said on the floor Thursday.

Majority Leader Mitch McConnell, R-Ky., continued to leave himself a step removed from the negotiations that were led by Treasury Secretary Steven Mnuchin and Speaker Nancy Pelosi, D-Calif., though he encouraged Republicans to support the package.

“In recent weeks, key officials on President Trump’s team engaged in extensive negotiations with Speaker Pelosi and the Democratic House. Given the exigencies of a divided government, we knew that any bipartisan agreement on funding levels would not appear perfect to either side,” McConnell said. “This is the deal the House has passed. This is the deal President Trump is waiting for and eager to sign into law. This is the deal that every member of this body should support.”

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 The bill would add $324 billion to spending limits over the next two fiscal years, not counting an extra $157 billion mainly for overseas military operations. About $77 billion of that is offset, which is about half of what the White House wanted, and the cuts don’t take effect until fiscal 2027. Under an assumption that higher spending continues in future years, the Committee for a Responsible Federal Budget estimates total added debt could reach $1.7 trillion over a decade.

Trump has embraced the deal, however, because it would uncork the higher military spending he wants — $738 billion in fiscal 2020, just shy of his initial budget request — while freeing up nondefense dollars that could be used for his priorities like border security and veterans health care.

Spending cuts, the president says, can come later.

“Budget Deal is phenomenal for our Great Military, our Vets, and Jobs, Jobs, Jobs!” Trump tweeted before the vote Thursday. “Two year deal gets us past the Election. Go for it Republicans, there is always plenty of time to CUT!“ Aides say he also has been making calls to on-the-fence GOP senators.

A ‘devastated’ military

David Perdue, R-Ga., another Trump ally who supports the deal, said he too is greatly concerned about the explosion of federal debt in recent years. But he said on the floor that discretionary spending as a share of the economy, even with the latest cap increases, is still declining, while the real cost-drivers are entitlements such as Social Security and Medicare.

At the same time, the discretionary cuts have “devastated” the military and must be reversed, Perdue said. “Two-thirds of our F/A-18 … fighter jets couldn’t fly” at the time Trump was inaugurated, he said. “Three of our Army brigades could go to war that night. I saw that. I’m on the Armed Services Committee and you can see that when you travel the world how absolutely gutted our military had been. So for the last two years we’ve been rebuilding that.“ 

Christopher S. Murphy, D-Conn., a member of the Appropriations Committee, rebutted Perdue by arguing defense budgets actually rose early in the Obama administration before the 2011 debt limit and deficit reduction law imposed on them by Republicans on Capitol Hill.

“To the extent that my colleagues are worried about what happened to defense spending in the last 10 years, there’s only one explanation for that,” Murphy said on the floor. “And that is the election of Republicans to the House of Representatives in 2010.“ 

Paul’s amendment to impose lower spending caps for the next decade, while requiring a balanced budget amendment to the Constitution before allowing a modest debt limit increase, was defeated on a 23-70 vote.

Minority Leader Charles E. Schumer, D-N.Y., praised the deal for eliminating the automatic cuts known as a sequester that have constrained federal agency budgets since the 2011 law was enacted. “The sequester hampered our ability to make investments in the middle class for eight years. No longer. Thank God,” Schumer said on the floor. “It means jobs. It means ladders up. And it means hope for the American people.“ 

Once the bill becomes law, it will prevent a $125 billion or 10 percent cut in discretionary spending next year. The debt limit suspension ensures the Treasury Department will have enough cash to meet U.S. financial obligations in early September, before lawmakers reconvene after the break. Mnuchin has said the debt ceiling provision would allow him to employ accounting maneuvers to stave off default into late 2021.

Under the bill total discretionary budgets would rise to $1.37 trillion in fiscal 2020, counting adjustments to the regular caps for war-related spending and the 2020 census. That would be a nearly 4 percent boost over the current year for appropriators to parcel out as they get to work. Within that topline, the $738 billion defense limit would amount to 3.1 percent more than the current year, while $632 billion for nondefense accounts would be roughly 4.5 percent higher than fiscal 2019. 

The House Appropriations Committee has a bit of a head start, having marked up all 12 of its bills earlier this year, passing 10 of those on the floor. But House Democrats will need to cut about $15 billion in spending from nondefense accounts and increase defense discretionary spending in their bills by $5 billion. They’ll also likely have to eliminate many of the partisan policy riders they included in their original bills.

The Senate Appropriations Committee waited to draft its spending bills until after Congress and the White House reached an agreement on total discretionary spending.

That process will kick into high gear during the August recess, culminating in a spree of markups during September.

There is some hope that the Defense, Labor-HHS-Education and Energy-Water spending bills could be packaged together and passed before the end of the fiscal year Sept. 30, but that will be a challenge.

Even if appropriators can meet that goal, the departments and agencies funded in the other 10 spending bills will still need to begin the fiscal year on a stopgap spending bill. 

Kellie Mejdrich contributed to this report.