President and Congress Reach Deal on Budget Caps and Debt Ceiling

After weeks of negotiations between House Speaker Nancy Pelosi (D-CA) and Treasury Secretary Steven Mnuchin, President Trump and congressional leaders signed off on Monday on a two-year budget deal. 

The deal raises the budget caps on defense and non-defense spending in FY20 and FY21 by a total of $321B. Only $77.4B would be offset with increased fees and an extension of cuts to Medicare and other programs that were set to expire in 2027. The deal provides $738B in FY20 and $740.5B in FY21 for defense spending and $632B in FY20 and $634.5B in FY21 for non-defense spending. The deal also suspends the debt ceiling for two years through July 31, 2021. At that point the debt ceiling would be reinstated and the Treasury Department would begin to use extraordinary measures to avoid defaulting on their obligations if Congress didn’t raise the debt ceiling. The extraordinary measures would potentially buy enough time until early 2022 before Congress would have to act again on the debt ceiling.

The House passed the two-year budget deal yesterday by a vote of 284 to 194. Sixteen Democrats voted against the measure: Blumenauer-OR, Brindisi-NY, Cooper- TN,Cunningham-SC, Harder-CA, Kind-WI, Lipinski-IL, McAdams-UT, Murphy-FL, Omar-MN, Peters-CA, Peterson-MN,Pressley-MA,Rice-NY, Schrader-OR, andSpanberger-VA.Republicans were divided on the measure, with 132 voting against it and 65 supporting it. The Senate will consider the measure early next week where it is expected to pass. And the President is expected to sign it given the support for the deal that he tweeted this week.

 FY18FY19BCA FY20 Budget CapsFY20 Budget DealBCA FY21 Budget CapsFY21Budget Deal
OCO$71.939B$69.0B $71.5B $69.0B
Total Defense$700.939B$716.0B $738.0B $740.5B
OCO + Disaster Relief$125.646B$23.577B $8.0B $8.0B
Census   $2.5B  
Total Non-Defense$704.646B*$620.577B $632.0B $634.5B
  • Includes $103.812B in emergency supplemental disaster relief funding (P.L. 115-72) to respond to Hurricanes Harvey, Irma and Maria.

Congress can now turn its attention to completing action on its FY20 appropriations bills. The House has passed 10 of its 12 annual spending bills. They will have to rework some of those spending bills to reduce nondefense spending by $15B and increase defense spending by $5B to reflect the new budget deal. They will also have to strike some of the policy riders in their bills given the agreement in the budget deal prohibiting their inclusion.

The Senate will work in September on passing its FY20 spending bills. The subcommittee chairs and ranking members will get their subcommittee allocations in the next couple of weeks so that they can write their bills during the August recess. They will begin with the Defense and Labor HHS Education bills when they return the week of September 9. One more bill may be added to that first minibus package – Sen. Lamar Alexander (R-TN) would like it to be the Energy and Water bill. The committee may not mark up all 12 bills in committee given the time limitations. They may opt to send the bills directly to the Senate floor or begin conference negotiations. 

The House is scheduled to be in session 12 days in September and the Senate is scheduled for 15 days. Given the tight timeframe before the end of the fiscal year on September 30, a continuing resolution (CR) will likely be needed to avoid a government shutdown. 

FY2020 Appropriations Bills Status

SubcommitteeHouse ActionSenate Action
AgricultureSubcommittee: May 23Full Committee: June 4Floor: June 25 
Commerce Justice ScienceSubcommittee: May 17Full Committee: May 22Floor: June 25 
DefenseSubcommittee: May 15Full Committee: May 21Floor: June 19 
Energy & WaterSubcommittee: May 15Full Committee: May 21Floor: June 19 
Financial ServicesSubcommittee: June 3Full Committee: June 11Floor: June 26 
Homeland SecuritySubcommittee: June 5Full Committee: June 11Floor:  
Interior EnvironmentSubcommittee: May 15Full Committee: May 22Floor: June 25 
Labor HHS EducationSubcommittee: April 30Full Committee: May 8Floor: June 19 
Legislative BranchSubcommittee: May 1Full Committee: May 9Floor:  
Military Construction VASubcommittee: May 1Full Committee: May 9Floor: June 25 
State Foreign OperationsSubcommittee: May 10Full Committee: May 16Floor: June 19 
Transportation HUDSubcommittee: May 23Full Committee: June 4 Floor: June 25 

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