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Senate passes two-year budget and debt ceiling bill, will send it to Trump

The Senate passed a two-year spending deal 67-28 on Aug. 1, which would increase federal spending on defense and domestic programs and would add to the national (Video: Reuters)

The Senate passed a broad, two-year budget deal on Thursday that boosts spending and eliminates the threat of a debt default until after the 2020 election, while reducing the chances for another government shutdown.

The legislation now goes to President Trump, who is expected to sign it despite conservative complaints that it will fuel the nation’s runaway debt.

“Budget Deal is phenomenal for our Great Military, our Vets, and Jobs, Jobs, Jobs! Two year deal gets us past the Election. Go for it Republicans, there is always plenty of time to CUT!” Trump wrote on Twitter ahead of the 67-28 vote.

Republican leaders including Trump himself had been working to round up GOP support ahead of Thursday’s vote, trying to avoid a repeat of the outcome in the House last week, when a majority of Republican lawmakers ignored Trump’s pleas and voted against the deal. It passed the House anyway, on the strength of Democratic votes. The lobbying effort paid off in the Senate as more Republicans voted in favor of the deal than against it, by a margin of 30-23. Five Democrats also voted “no.”

The Daily 202: The budget deal shows how unserious the GOP is about deficits in the Trump era

The agreement heads off several looming fiscal threats, most immediately the possibility that the Treasury Department could have run out of money to pay its bills as early as September if Congress didn’t act, resulting in a market-shattering default on U.S. obligations.

The deal passed on Thursday suspends the debt ceiling through July 31, 2021, removing the threat of default and the accompanying risk of political brinkmanship that typically accompanies debt limit negotiations. It lifts strict Obama-era spending caps that would otherwise slash indiscriminately into agency and military budgets, and sets overall spending levels that will make it easier for lawmakers to write the individual appropriations bills needed to keep the government open past Oct. 1, when current agency budgets expire.

The deal came together after weeks of intense negotiations between the Trump White House and Speaker Nancy Pelosi (D-Calif.), which proceeded even as the president sparred with House Democrats on multiple other fronts, and increasing numbers of them called for his impeachment. The agreement stands as a rare example of bipartisan legislating in the Trump era, and is one of the few major votes Congress will take this year.

President Trump on July 19 said, “I can’t imagine anybody ever even thinking of using the debt ceiling as a negotiating wedge.” (Video: The Washington Post)

Trump praises ‘very good talks’ as White House, Pelosi close in on two-year budget deal

Passage of the bill was the Senate’s last act before leaving town for an extended summer recess, on the tails of House members who adjourned last week. Lawmakers will return to the Capitol after Labor Day to confront a thin legislative agenda, including the pending North America trade deal, which faces an uncertain outcome.

Lawmakers will also need to pass individual spending bills to avert a government shutdown on Oct. 1, an outcome all want to avoid after the record-long 35-day partial shutdown last winter over Trump’s border wall. Trump’s wall could once again prove a sticking point in negotiations this fall, although a recent Supreme Court decision allowing the president to spend billions in Pentagon funds on border barriers lessens the need for him to get more money from Congress.

The deal passed Thursday increases military and domestic spending by $320 billion over two years compared to existing law. It increases overall discretionary spending from $1.32 trillion in fiscal 2019 to $1.37 trillion in 2020 and $1.375 trillion in 2021.

Discretionary spending is the money controlled by Congress and does not include programs such as Social Security and Medicare, which account for about two-thirds of federal spending.

The government spends more money than it brings in through revenue, and it covers the difference by issuing debt. But the Treasury Department can only issue debt up to a limit set by Congress, known as the debt ceiling. If the debt ceiling is not lifted, the government could fall behind on some of its payments, which could spark another financial crisis.

The government now spends roughly $4.4 trillion and is expected to bring in roughly $3.5 trillion in revenue, leaving a gap of between $900 billion and $1 trillion.

The budget deal is good politics — but terrible policy

Trump had — before coming president — suggested that the debt ceiling shouldn’t be raised. But in the current round of negotiations, Treasury Secretary Steven Mnuchin argued for the need to ensure stability by raising the debt ceiling, and he prevailed over budget hawks in the administration such as acting budget director Russell Vought who were pushing for significant cuts to accompany the deal.

GOP supporters of the budget pact, including Trump and Majority Leader Mitch McConnell (R-Ky.), focused on lifting the debt ceiling as well as the increase in the Pentagon budget in arguing that the agreement was a good deal for Republicans, and the best that could be achieved under divided government.

“As our adversaries grow stronger, critical gaps remain in our ability to counter expansion, influence campaigns, and direct acts of violence toward America and our allies around the world,” McConnell said on the Senate floor ahead of the vote. “This bipartisan funding deal is the opportunity — the only opportunity on the table — to continue filling in those gaps, before it’s too late.”

But a number of Senate Republicans, including some who support Trump strongly on most issues, were reluctant to go along. The national debt now stands at $22 trillion, but the deal makes no attempt to rein in spending, take on entitlements, or make any structural changes many Republicans say are necessary to reform Washington’s dysfunctional budget process.

Instead, attempts by Vought and others in the Trump administration to negotiate significant spending cuts as part of the deal were mostly rejected, leaving $77 billion in largely cosmetic “offsets” that are supposed to occur in years ahead. Trump has told aides to prepare for budget cuts if he wins a second term, a possibility his Thursday tweet saying “there is always plenty of time to CUT” seemed to confirm, but those theoretical future cuts did little to reassure some Republican senators in the present.

“I’m worried about the staggering debt we’re leaving for our children and grandchildren,” said Sen. Rick Scott (R-Fla.). “Too often in Washington, compromise means both sides get everything they want so that no one has to make a tough choice. I can’t support that.”

Why a strange bit of bipartisanship may be breaking out

Many Democrats, however, praised the deal for heralding the end of the Budget Control Act of 2011, which was meant to exert fiscal discipline on Washington by imposing strict spending caps known as the “sequester.” Instead, lawmakers came together on a bipartisan basis every two years to increase spending over the caps, increasingly without bothering to pay for it. The current deal represents the last such move under the Budget Control Act before its expiration.

“This deal ends the threat of sequester permanently. That is huge,” said Senate Minority Leader Charles E. Schumer (D-N.Y.). “As large forces erode the financial resources, automation, technological advancement, one of the only enforcements large enough to push back on the side of the middle class and help them is the federal government.”

Damian Paletta contributed to this report.