Leaders in Congress have reached a deal to spend a lot more money. The U.S. government will spend about $500 billion more over the next two years, the largest increase in federal spending since the stimulus during the Great Recession. The bulk of the extra spending would not be paid for, meaning the United States' $20 trillion debt would get worse.
More than 60 percent of the extra funding would go toward military spending, a major Republican priority. The rest would mainly go to disaster relief, health care and other domestic priorities favored by Democrats.
“You get some things you like; you give the other party things they like,” House Speaker Paul D. Ryan (Wis.) said Thursday. “That's what bipartisan compromise is all about."
Here's a rundown of 12 of the most important parts of the big spending deal.
It funds the government through March 23. The intention is to give lawmakers a bit more time to craft all the details needed for the full appropriations bills that become the official federal budget.
It gives Congress permission to spend $500 billion more. The breakthrough is that Republican and Democratic leaders have agreed to spend a lot more money over the next two years, scrapping the “caps” that were in place on military and nonmilitary funding. There are a few “pay fors” in the deal, but the official word from the nonpartisan Congressional Budget Office is that the bill would add $320 billion to the deficit.
While some lawmakers are balking at the price tag and how much is added to the debt, many are willing to set aside those concerns because they are getting more money for programs they care about most. This basically ensures there won't be another budget battle before the 2018 midterm elections.
Military spending jumps 10 percent. The deal provides about $700 billion for national defense and war spending in 2018 and $716 billion in 2019, a major increase for the Pentagon that busts the spending caps. This works out to roughly a 10 percent increase over the $634 billion spent last fiscal year on defense.
“The defense hawks got everything they wanted in this deal,” said Todd Harrison, a budget expert at the Center for Strategic and International Studies. Military leaders had complained for years that the spending caps were gutting the modernization budget and forcing the military to slash essential tasks such as pilot training hours or ship maintenance. “This certainly gives the Defense Department all of the funding it could possibly expect,” Harrison said.
The largesse also removes any pressure for the military to embrace change. For example, the Pentagon said it has 22 percent excess base capacity that it would like to close. The extra money also removes pressure to cut weapons systems that some say are better suited to the last war, such as the A-10 attack jet or the U2 high-altitude surveillance plane.
A 'historic' 10 percent increase in domestic spending. Some Democrats are calling this deal a win because it gives a “historic” boost to nondefense spending. Overall, domestic spending would rise by $60 billion this fiscal year and $78 billion the following year. President Trump had proposed a substantial decrease in domestic spending in his first budget, but this deal would boost total nondefense spending by about 10 percent, from $539 billion last year to $591 billion this year.
The deal includes more money for areas including child care, college affordability and infrastructure. There is also additional money going to fund the Internal Revenue Service and Social Security Administration, so there will be more staffers to help Americans who need help with paperwork.
Federal health programs get much-needed funding. Meeting a key Democratic priority, the agreement funnels billions of dollars for several key health-care priorities — funding community health centers for two years, extending the Children’s Health Insurance Program for an additional four years, and staving off several cuts to Medicare and Medicaid that would have been triggered had the caps not been lifted.
“All I can say is the obvious: It’s great to get the funding for these finally nailed down,” said Tim Jost, a health-care expert at the Washington and Lee University School of Law. “It finally brings stability to some very important health-care programs.”
About $7 billion will be spent on the community health centers, which provided care to 26.5 million Americans in 2016. Across the country, about 2,600 of these centers — which primarily help low-income people — would be slated for closure if the federal government stopped funding them entirely.
Congress already agreed to fund the CHIP program in January but only for six years. This deal will extend that to 10 years.
The deal also gives an extra $2 billion a year in 2018 and 2019 to help the Department of Veterans Affairs with its health-care backlog.
Help for Puerto Rico. The spending package would provide nearly $90 billion in disaster relief for Puerto Rico, the U.S. Virgin Islands, Florida and Texas — areas still trying to recover from devastating hurricanes last year. That is more than double what the Trump administration initially requested.
About $16 billion of that money is expected to go to Puerto Rico, as swaths of the island continue to deal with power outages and a lack of safe drinking water, said Ramón Luis Nieves, a former member of the Puerto Rico Senate who has lobbied Congress for more funding for the island. The allocation is still short of the $94 billion that Puerto Rico Gov. Ricardo Rosselló said is necessary to help the island recover from Hurricane Maria. (For instance, the deal allocates about $2 billion to repairing the island’s energy grid, while Rosselló has said $17 billion will be necessary.)
“I hope this is just the beginning of trying to comply with the governor’s request,” Luis Nieves said.
More tax cuts for 2017. The deal also extends a lot of tax cuts for individuals and businesses for 2017. Yes, you read that right. It's a massive retroactive tax break. Even though people spent all of 2017 thinking those tax breaks were done and making their plans based on that, they now get surprise tax relief.
“This is not an ideal way of making federal policy,” said Scott Greenberg, a senior analyst at the Tax Foundation. “It’s probably not a good idea to make retroactive tax extenders in the first place.”
So who gets the extra tax breaks? A bunch of green-energy projects, including wind and geothermal projects and fuel-cell production efforts. Rum producers in Puerto Rico and the U.S. Virgin Islands. Film, TV and theater production companies. And people will be able to deduct private mortgage insurance and mortgage debt relief.
Extra money to fight the opioid epidemic. The deal would funnel $6 billion over two years to fight the opioid crisis with new grants, prevention programs and “law enforcement efforts” across the country. States with the highest mortality rates would get the most federal dollars.
The debt ceiling is raised until March 2019. To pay for all of this, the government is going to have to borrow more money. That's why the deal also waives the debt ceiling — the cap on how much the Treasury Department can borrow — until March 1, 2019.
More money for GOP social priorities such as abstinence education. The deal includes funding for more abstinence education, and it includes a provision to exempt Berea College in Kentucky, a school where students do not pay tuition, from having to pay the new tax on large college endowments that was enacted as part of the GOP tax bill.
The U.S. Strategic Petroleum Reserve would be sold down. In an effort to cover at least a bit of the price tag, the bill calls for selling 15 percent of the petroleum reserve. But interestingly, the selling would not start until 2022. Budget hawks who are concerned about the level of U.S. debt call “pay fors” such as this “gimmicks” that are one-time revenue increases. Congress was trying to get away from those, but this bill appears to abandon that commitment.
Two losers: “Dreamers” and future taxpayers don't do well in this deal. The bill does nothing for the 619,000 young people known as “dreamers” who were brought to the United States illegally as children and have grown up in the country. If they followed the rules, an Obama-era program known as Deferred Action for Childhood Arrivals, or DACA, allowed them to stay in the country. But that protection is set to end on March 6. This deal still leaves them hanging, although Ryan says Congress will deal with them next.
Congress is also spending more money that the government does not have. Someone will have to pay for that down the line, by raising taxes or with future spending cuts. Maya MacGuineas, president of the Committee for a Responsible Federal Budget, slammed the deal as “terrible.” Her organization predicts the United States will hit $1 trillion in deficits as early as next year. Even worse, with this budget deal, her group says, trillion-dollar deficits are here to say, possibly for the next decade.
“If this bill passes, it is pretty much the end of fiscal discipline,” tweeted Ben Ritz, a former budget analyst at the Bipartisan Policy Center who also interned for some Democratic politicians.
Unlike previous budget deals, this one doesn't merely reverse sequestration (which was never intended to go into effect) – it actually busts through the *original* BCA caps.
— Ben Ritz (@BudgetBen) February 7, 2018
If this bill passes, it's pretty much the death of fiscal discipline. pic.twitter.com/vXyI3DScpC