Deal forestalls sequester, allows $323 billion increase with partial offsets; Democrats agree not to include 'poison pill' policy riders in spending bills

On July 22, 2019, the White House and congressional negotiators reached agreement on legislation that would suspend the debt limit through July 2021 and establish budget caps for fiscal years 2020 and 2021, canceling the automatic "sequester" cuts for the next two years that would otherwise take place under the 2011 Budget Control Act.

Attached with this Alert please find PDFs of: 1) the legislative text of the Bipartisan Budget Act of 2019; 2) a budget table showing expenditure caps for the next two fiscal years; and 3) a two-page summary of the terms of the agreement.

The agreement could be brought to the House floor for a vote by Thursday, July 25, though that timing could slip to Friday. The House is currently scheduled to adjourn for its summer recess at the end of this week. The Senate is currently scheduled to remain in session an additional week, through Friday, August 2.

Spending authority, debit limit suspension: According to materials released by both the House and Senate leadership, the agreement would increase spending by $323 billion over the spending limits set under the Budget Control Act, while also suspending the debt limit through July 31, 2021. The agreement stipulates that there will be "no additional restrictions" on the Treasury's ability to use extraordinary measures to make additional payments past that date. The agreement features a $2.5 billion exemption from the budget caps for the 2020 Census, something for which Democrats had pressed, though that figure is smaller than the $7.5 billion exemption Democrats had included in a budget caps bill produced by the House Budget Committee (HR 2021). The agreement includes $8 billion for State Department operations in the Overseas Contingency Operations (OCO) category but does not include a $1.15 billion exemption to the caps for IRS funding over two years, which House Democrats had requested.

Budget offsets: According to a summary of terms to which all parties agreed, "The agreement includes measures partially offsetting its cost. The measure would extend the Budget Control Act mandatory sequestration," which is currently set to expire at the end of fiscal 2027, "and customs user fees to achieve a total offset level of $77.4 billion as scored by the Congressional Budget Office." Medicare is by far the largest item in the expenditures that are covered under the BCA's "mandatory sequestration" element, which would be extended by two years through 2029, with automatic cuts limited at 2%. Social Security, Veterans programs and Medicaid are exempt from the sequester.

"No poison pills" or "additional new riders": The summary says that specific spending decisions "shall be left to the members of the Appropriations Committees, with 302(b)s set through the regular process of the committees. Congressional leaders and the Administration agree that, relative to the FY 2019 regular appropriations Acts, there will be no poison pills, additional new riders, additional CHIMPS, or other changes in policy or conventions that allow for higher spending levels, or any non-appropriations measures unless agreed to on a bipartisan basis by the four leaders with the approval of the [president]."

'Reducing delays.' According to the summary, "Senate Leaders agree that if a bill has been reported on a bipartisan basis from the Senate Appropriations Committee and is consistent with the [Budget Control Act] spending caps, and has the support of the Chairman and the Ranking Member, they will work together to minimize procedural delays." The terms also stipulate that the president, the bipartisan congressional leadership and the chairmen of the House and Senate Appropriations committees "shall work together to reach bicameral and bipartisan agreement on the orderly and timely consideration of FY 2020 appropriations bills to avoid a government shutdown, and a 12-bill omnibus," with similar language for fiscal 2021 as well.

Statements

The White House released a statement Monday evening saying, "President Donald J. Trump is pleased to have reached a bipartisan compromise with [congressional leadership] on a two-year budget and debt ceiling deal. The agreement includes absolutely no poison pills. This compromise will continue the rebuilding of our great military and ensure our veterans receive the care they deserve. Both the House and the Senate should quickly move this deal to the [president's] desk for signature."

In a statement released jointly by House Speaker Pelosi and Senate Minority Leader Schumer, the two said, "Democrats have achieved an agreement that permanently ends the threat of the sequester. We are pleased that the Administration has finally agreed to join Democrats in ending these devastating cuts … With this agreement, we strive to avoid another government shutdown, which is so harmful to meeting the needs of the American people and honoring the work of our public employees. Democrats are also pleased to have secured robust funding for critical domestic priorities in this agreement. Democrats have always insisted on parity in increases between defense and non-defense, and we are pleased that our increase in non-defense budget authority exceeds the defense number by $10 billion over the next two years. It also means Democrats secured an increase of more than $100 billion in funding for domestic priorities since President Trump took office … After a long negotiation, we have only agreed upon offsets that were part of an earlier bipartisan agreement … The House will now move swiftly to bring the budget caps and debt ceiling agreement legislation to the Floor, so that it can be sent to the [president's] desk as soon as possible."

In a statement released Monday evening, Senate Majority Leader McConnell said, "I am very encouraged that the [Administration] and Speaker Pelosi have reached a two-year funding agreement that secures the resources we need to keep rebuilding our armed forces. This was our top objective … I commend the [president] and his negotiating team who achieved this agreement: Secretary Mnuchin, Acting Chief of Staff Mulvaney, and Acting Director Vought. Congress and the Trump Administration have made enormous strides for our national defense over the past two years, but our work is not yet complete. While the reality of divided government means this is not exactly the deal Republicans would have written on our own, it is what we need to keep building on that progress … The next step is for both the House and the Senate to pass this bipartisan agreement so that President Trump can sign it into law. I intend for the Senate to vote on it before members depart for the August state work period."

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ATTACHMENTS

Bipartisan Budget Agreement 2019 Terms

Bipartisan Budget Agreement FY20_21 Legislative text

Bipartisan Budget Agreement FY20_21 Agreement table