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House Passes Bipartisan Debt-Limit, Budget Deal Backed By Trump

Erik Wasson

(Bloomberg) -- The House passed a two-year debt ceiling extension and budget bill Thursday in a bipartisan deal backed by President Donald Trump that will lessen the chance of a shutdown this fall and put any risk of a U.S. government default off until after the 2020 election.

The measure, passed 284-149, would allow a $324 billion increase in discretionary spending over two years over existing budget caps. Most Republicans voted no despite Trump having urged them to support it. Senate Majority Leader Mitch McConnell called the plan a “good deal” and said he expects his chamber to clear it next week for Trump’s signature.

“House Republicans should support the TWO YEAR BUDGET AGREEMENT which greatly helps our Military and our Vets. I am totally with you!” the president wrote on Twitter Thursday morning, hours before the vote.

Voting for the bill were 219 Democrats and 65 Republicans, while 16 Democrats and 132 Republicans opposed it.

The bill would avert a potential default on payments in early September by extending the U.S. borrowing limit through July 31, 2021. Congress will still need to scramble in September to pass spending bills adhering to the new $1.3 trillion spending cap to fund the government when the new fiscal year begins Oct. 1.

The deal, reached after weeks of negotiations between Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin, stands in contrast to an earlier fight over spending Trump’s demand for border-wall funding that led to a 35-day partial government shutdown that ended Jan. 25.

Republican leaders are selling the plan to their members as a necessary increase in military spending.

Pelosi gained support for the compromise from progressive Democrats who oppose more military funding by highlighting the spending increases for domestic programs, balanced against just $77 billion in budget savings.

The plan, H.R. 3877, also ends automatic spending cuts enacted during a showdown over the debt limit in 2011. Congress has canceled the automatic cuts every year since then, eliminating the incentive to pursue a grand bargain to reduce the national debt.

Representative Mark Pocan, co-chairman of the Congressional Progressive Caucus, said he wasn’t concerned that the debt ceiling would return in two years, when Republicans could try to use it to force spending cuts.

“We lifted it for two years,” Pocan said. “That’s a good start.”

His group put out a statement praising the deal’s “investments in domestic priorities – including housing assistance, food aid, education and job training.”

“This deal does not address the bloated Pentagon budget, but it does begin to close the gap in funding for families, by allocating more new non-defense spending than defense spending for the first time in many years,” the Progressive Caucus said in a statement.

Moderate Democrats normally concerned about the deficit were swayed to support the legislation with the debt ceiling deadline looming.

“The budget is less than perfect for sure,” New Jersey Democrat Jeff Van Drew said. “There are issues, especially debt issues, that we have to deal with someday.”

GOP Split

The Republicans who opposed the deal cited concerns that over time the measure will add nearly $2 trillion to the debt, counting inflation and net interest.

“Any time you have a big budget deal, it’s tough rounding up votes for it because everyone can find things you don’t like and it’s really easy to overlook the things you like,” said second-ranking House Republican Steve Scalise of Louisiana.

The three dozen members of the conservative House Freedom Caucus led the charge against the bill.

“Our country is undeniably headed down a path of fiscal insolvency and rapidly approaching $23 trillion in debt. This is completely unsustainable, and we owe taxpayers and future generations better,” the group said in a statement.

Meadows, a Trump ally and the Freedom Caucus chairman, said he would not be swayed by Trump tweets in favor of the deal.

No ‘Poison Pills’

“We don’t believe you should bankrupt America,” he said. “We have a difference of opinion on this particular issue.”

Congress will work in September on passing spending bills to avoid a shutdown. Republicans and Democrats, as part of the new budget deal, agreed that no “poison pills” will be in the spending bills, though they left that term undefined. That creates the risk that a dispute over a specific funding proposal, such as a border wall, could cause another shutdown.

The House passed 10 of the 12 annual spending bills, with the Department of Homeland Security bill held up over border issues and the legislative branch bill stalled over an attempt to raise lawmaker pay for the first time in a decade.

The Senate hasn’t drafted any of the spending bills and plans to vote on them in committees during that month. Given the backlog, a stopgap spending bill is likely to be enacted before the Oct. 1 deadline as the full-year spending bills are negotiated.

(Updates with vote breakdown in fourth paragraph)

To contact the reporter on this story: Erik Wasson in Washington at ewasson@bloomberg.net

To contact the editors responsible for this story: Joe Sobczyk at jsobczyk@bloomberg.net, Laurie Asséo, Anna Edgerton

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