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Deal Reached on Budget Caps and Debt Ceiling, On to Senate for Approval

Capitol Connector
Your source for the latest updates from Capitol Hill. We translate policy into practice so you can learn how policy trends will affect your work and how best to prepare.

Shelley Starkey

Deal Reached on Budget Caps and Debt Ceiling, On to Senate for Approval

July 26, 2019 | Federal Budget | Comments
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Congressional leaders and White House officials reached a sweeping deal on Monday that would address pressing deadlines for the federal debt ceiling and budgetary spending caps. The Bipartisan Budget Act (H.R. 3877) represents the largest-ever increase in base funding above sequestration levels for both defense and nondefense spending. The deal also effectively ends the threat of sequestration – mandatory automatic spending cuts put in place in 2011. The House passed the bill on Thursday, and the Senate is expected to hold its vote next week.

WHAT’S IN THE DEAL?

The Bipartisan Budget Act provides for a $321 billion boost in federal defense and nondefense spending over the next two years. Important highlights from the deal include:

  • Defense and nondefense spending increases: The deal compromises around the usually highly-partisan debate regarding whether defense or nondefense spending should be a priority by including substantial increases for both. More specifically, it includes a $22 billion increase in defense spending in Fiscal Year 2020, and a $27 billion increase in nondefense spending, bringing their totals to $738 billion and $632 billion respectively for the next fiscal year.
  • A permanent end to the threat of sequestration: Until now, federal programs were at risk of automatic spending cuts of 14 percent to defense spending and 13 percent to non-defense spending should the budget hit the spending caps. By waiving the spending caps for FY 2020 and 2021, the agreement essentially marks the end of the 2011 Budget Control Act, which is set to expire at the end of 2021.
  • Paving the way for FY 2020 appropriations: As part of the deal, Congressional leadership has pledged to forgo “poison pill” measures and policy riders that lack bipartisan support in the FY 2020 appropriations process to ensure a quick budget making process. Although the House has completed much of its appropriations work already, the Senate will rush to complete its own following the passage of the Bipartisan Budget Act. Both chambers will then need to come to an agreement before the end of FY 2019 to avoid a government shutdown.

WHAT’S NEXT?

The Senate is expected to hold its vote next week, then sending the plan to the White House for the President’s signature. Should the deal pass, upon its return from the August recess, Congress will work quickly to complete its Appropriations work for FY 20 before the September 30 deadline. Congressional negotiators have agreed that both a large scale omnibus spending measure and a government shutdown should be avoided. Stay tuned to Capitol Connector in the coming months for updates on the Congressional budgeting process for FY 20.