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House, Senate Exit after Passing Two-Year Budget Deal that Lifts Debt Ceiling

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Congress passed a two-year budget deal that lifts the debt ceiling and boosts government spending by $320 billion before leaving town for a month-plus-long summer recess. The legislation eliminates all limits on federal government debt through July 2021, after the next Presidential election. It also increases spending caps for the next two years.

In an unusually bipartisan vote House lawmakers passed the package 284-149 on July 25. Sixty-five Republicans voted for the measure, and 16 Democrats voted against it. The Senate passed identical legislation on August 1 by a vote of 67-28.

The budget deal would ramp up defense spending to $738 billion and $740 billion over the next two fiscal years, respectively, compared with the current level of $716 billion. Non-defense spending would also rise to $632 billion and $634.5 billion during the same period, an increase from this year’s $605 billion.

Speaker Nancy Pelosi and Senate Minority Leader Chuck Schumer made the deal with Trump administration officials, and the president endorsed the agreement. With the end of the fiscal year fast approaching, getting the legislation to Trump for signature before the Congressional recess was critical. Otherwise the U.S. would have begun defaulting on its payment obligations during the first week of September before Congress was scheduled to return from recess on September 9.

Most Members of both the House and Senate see the deal as a reasonable compromise to avoid a government shutdown. However, some House Republicans, particularly in the more conservative Freedom Caucus, were not enthusiastic because discretionary spending continues to grow faster under Trump than Obama. The national debt was at $19 trillion when Trump took office and surpassed $22 trillion in early July. The Trump administration estimates the deficit this fiscal year will add another $1.7 trillion, up from $779 billion last year and $587 billion in 2016, Obama’s last full year in office.


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