politics

Senate Deal Would Avoid Shutdown as Funding Fight Turns to House

Updated on
  • Two-year agreement would raise spending by almost $300 billion
  • Current government funding runs out at end of day Thursday
The Senate reached a two-year bi-partisan budget deal. Bloomberg’s Kevin Cirilli reports.

Senate leaders announced a bipartisan two-year budget agreement Wednesday that would provide nearly $300 billion in additional funding, a crucial step toward averting a Friday government shutdown and ending a months-long impasse on spending priorities.

The plan would suspend the federal debt ceiling until March 1, 2019, and would provide almost $90 billion in hurricane and wildfire disaster aid. A Senate vote is expected Thursday, followed by the House.

The dollar rose on news about the deal, as did yields on the 10-year U.S. Treasury.

Majority Leader Mitch McConnell of Kentucky called the plan a “significant agreement” among Senate and House leaders that gives both parties what they want. It includes a long-sought defense spending boost that was the top goal of Republicans who lead both chambers in Congress and gives more funding for domestic programs sought by Democrats.

President Donald Trump gave his blessing to the agreement, saying on Twitter that it will give the military what it needs. “Republicans and Democrats must support our troops and support this Bill!” he wrote in a tweet.

Defense spending would increase by $80 billion over current law in this fiscal year and $85 billion in the one that begins Oct. 1. Non-defense spending would rise by $63 billion this year and $68 billion next year.

Secretary of Defense James Mattis told reporters at the White House that he’s optimistic that Congress will give the Pentagon the funding it needs.

Lawmakers intend to combine the two-year spending deal with a short-term measure to keep the government operating when current funding runs out at the end of the day Thursday. Like the House-passed short-term bill, the Senate measure would fund the government through March 23 while lawmakers fill in the details on longer-term spending.

Senate Minority Leader Chuck Schumer of New York, speaking on the floor after McConnell, said the agreement was completed "without a great deal of help from the White House."

"I believe we have reached a budget deal that neither side loves but both sides can be proud of," Schumer said.

Immigration Legislation

One complication is House Minority Leader Nancy Pelosi of California, who set a record going back to at least 1909 by speaking continuously while standing on the House floor for more than eight hours Wednesday. She said she won’t back the spending plan without a commitment from Speaker Paul Ryan of Wisconsin to allow an open debate on bipartisan immigration legislation, similar to a promise made by McConnell.

However, she sidestepped questions about whether she’s actively lobbying Democrats to vote en masse against the deal, saying she doesn’t know how many members of the party would reject it.

Ryan has stuck to an immigration outline set out by Trump. “We’re not going to bring immigration legislation through that the president doesn’t support,” the speaker said on Tuesday.

Representative Mark Meadows of North Carolina, chairman of the conservative House Freedom Caucus, said he’ll oppose the plan as "fiscally irresponsible." But he said he doubts he can block a deal in the House, predicting that a majority of Republicans and Democrats will back it.

Republican Senator Rand Paul of Kentucky said he opposes the increases in both defense and domestic spending and blames both parties for blowing up the federal deficit. "I’m absolutely a no," he said.

Total defense spending, including war funds, would rise to $716 billion in 2019, equal to the amount Trump is set to request in his budget next week, lawmakers said. The higher spending would add to an expanding budget deficit that Steve Bell, a former Senate Budget Committee staff director, forecast would reach as much as $1 trillion next year.

The prospect that a budget deal would also raise the debt ceiling eased investors’ anxiety about Treasury bills that mature in early March. Investors had been asking for extra compensation to own the March 8 maturity in particular, out of concern that the impasse could lead to delayed payments. On Wednesday, that premium all but evaporated.

‘Complete Betrayal’

Pro-immigration Democrats pushed Pelosi to demand an open debate on immigration legislation rather than being forced to vote on a Republican-only proposal.

Representative Luis Gutierrez, an Illinois Democrat, said a budget deal is unacceptable without protection for undocumented immigrants brought to the U.S. as children, who have been covered under the soon-to-end Deferred Action for Childhood Arrivals program.

“That would be a complete betrayal,” he told reporters, adding that “a lot” of Democrats would feel the same.

McConnell reiterated his promise to allow an open Senate debate on immigration legislation “that will be fair to all sides.” He said it will start with essentially a blank slate and both Democrats and Republicans will be able to offer amendments for a vote.

Disaster Relief

Puerto Rico Governor Ricardo Rossello said the budget deal will provide the island with $2 billion in federal funds to rebuild its hurricane-damaged electricity system. Another $4.9 billion would increase Medicaid caps for Puerto Rico and the U.S. Virgin Islands for two years.

The deal would repeal a Medicare cost-containment board that Obamacare sought to create, but which hasn’t been set up. Congress already has repealed Obamacare’s requirement that most individuals obtain insurance or pay a penalty, and has delayed several taxes in the law.

The deal would extend the Children’s Health Insurance Program for 10 years, four more than the extension Congress just enacted and renew some expired tax breaks for one year.

The plan includes $20 billion for infrastructure over two years, including roads and drinking water, he said. There’s also $6 billion to combat opioid abuse and improve mental health, $2 billion for research at the National Institutes of Health, and $4 billion for college affordability.

The deal would be at least partly paid for by $100 billion in cuts to mandatory spending programs elsewhere in the budget such as Medicare, according to a Republican summary.

— With assistance by Alexander Ruoff

(Updates with debt limit, disaster aid details in second paragraph.)
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