Trump And Congress Reach Deal On Budget-Busting Debt Deal

President Trump and the Congressional leadership have reached agreement on a multi-year budget deal that that busts through all remaining controls on spending.

President Trump and Congressional leaders from both parties reached a deal that basically pushes any debate about spending and the debt ceiling until after the Presidential election:

White House and congressional negotiators reached accord on a two-year budget on Monday that would raise spending by $320 billion over existing caps and allow the government to keep borrowing, most likely averting a fiscal crisis but splashing still more red ink on an already surging deficit.

If passed by Congress and signed by President Trump, the deal would stop a potential debt default this fall and avoid automatic spending cuts next year. The agreement would also bring clarity about government spending over the rest of Mr. Trump’s term, though Congress must still fill in the details, program by program.

“I am pleased to announce that a deal has been struck with Senate Majority Leader Mitch McConnell, Senate Minority Leader Chuck Schumer, Speaker of the House Nancy Pelosi, and House Minority Leader Kevin McCarthy — on a two-year Budget and Debt Ceiling, with no poison pills,” Mr. Trump announced on Twitter. “This was a real compromise in order to give another big victory to our Great Military and Vets!”

A statement issued late Monday by Stephanie Grisham, the White House press secretary, echoed Mr. Trump’s tweet and urged both chambers to pass the deal quickly.

But it is another sign that a Capitol once consumed by fiscal worries simply no longer cares — even as the government’s deficit approaches $1 trillion a year. Still, the accord would lift the debt ceiling high enough to allow the government to keep borrowing for two more years, punting the next showdown past the 2020 elections.

“It’s pretty clear that both houses of Congress and both parties have become big spenders, and Congress is no longer concerned about the extent of the budget deficits or the debt they add,” said David M. McIntosh, the president of the Club for Growth, a conservative group that advocates free enterprise.

The agreement, negotiated largely by Ms. Pelosi and Treasury Secretary Steven Mnuchin, would raise spending by about $320 billion, compared with the strict spending levels established in the Budget Control Act of 2011 and set to go into effect next year without legislative action. Spending on domestic and military programs would both increase, a key demand of Ms. Pelosi and Mr. Schumer, offset by $77.4 billion in spending cuts, half the $150 billion in cuts some White House officials initially demanded.

In a joint news release, Ms. Pelosi and Mr. Schumer praised “robust funding for critical domestic priorities,” saying that since the 2017 fiscal year, they had pushed domestic spending up by $100 billion. The deal includes an additional $2.5 billion for the 2020 census, according to a senior Democratic aide, and domestic programs would see about $10 billion more than military programs over two years.

The negotiators hope to enact the deal before Congress leaves for its August recess.

“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,” Mr. McConnell said.


But with the top-line figures all but secured, the deal would be the end of the Budget Control Act, which President Barack Obama signed into law after House Republicans pushed the government to the brink of defaulting on its debt. That law, once seen as the Republicans’ crowning achievement in the Obama era, set strict spending caps, enforced with automatic spending cuts.

But since 2014, a succession of budget deals have waived those caps, and the new deal not only lifts them again but also allows the whole law to expire in 2021.

And this time around, the approach of the debt limit hardly caused a ripple of consternation about the rising red ink. “I’ve seen no evidence that it’s even being discussed,” said Senator James Lankford, Republican of Oklahoma. “That’s the hard part for me.”

Meantime, the federal debt has ballooned to $22 trillion. Despite healthy economic growth, the federal deficit for this fiscal year has reached $747 billion with two months to go — a 23 percent increase from the year before.

“It appears that Congress and the president have just given up on their jobs,” said Maya MacGuineas, the president of the Committee for a Responsible Federal Budget, which blasted out a statement arguing that the tentative deal “may end up being the worst budget agreement in our nation’s history.”

“The economy is great and able to accommodate changes,” she said in an interview. “But we’re about to make things worse due to nothing other than the lack of political will.”


The president has repeatedly called for deep spending cuts in the budgets he has submitted to Congress — then signed several laws that have increased the deficit even further.

As president, Mr. Trump has overseen both a binge in discretionary spending, the part of the federal budget governed by annual spending bills, and a plunge in expected tax revenues as a result of the tax cuts that stand as his signature legislative achievement. The federal budget deficit has increased by an average of 15 percent for each fiscal year he has been in office.

Mr. Obama ran large deficits in his first term in the wake of the 2008 financial crisis. But in his second term, deficits fall by an average of 11 percent per fiscal year.

In that first Obama term, which included a large government stimulus package to jump-start job creation in the depths of the recession, discretionary spending on military and domestic items rose by about 3 percent per year, on average. In his second term, such spending declined by an annual average of nearly 2 percent.

Mr. Trump is currently on pace to increase discretionary spending by an average of nearly 4 percent per year.

Mr. Trump’s tax cuts, which reduced rates for businesses and individuals, have not paid for themselves, as some administration officials said they would. Instead, they have reduced individual and corporate tax revenues by about 8 percent per year, compared with what budget forecasters expected before the cuts were passed into law.

Combined with increased costs from paying interest on a larger national debt, the tax cuts are on pace to add nearly $400 billion to the national debt during the 2018 and 2019 fiscal years, according to data from the Congressional Budget Office.

More from The Washington Post:

The White House and House Speaker Nancy Pelosi (D-Calif.) reached a tentative two-year budget deal Monday that would raise spending limits by $320 billion and suspend the federal debt ceiling until after the 2020 presidential election.

The agreement, which still must be passed by Congress, probably would prevent a debt-ceiling crisis later this year but also would continue Washington’s borrowing binge for at least two years.

“I am pleased to announce that a deal has been struck with Senate Majority Leader Mitch McConnell, Senate Minority Leader Charles E. Schumer, Speaker of the House Nancy Pelosi, and House Minority Leader Kevin McCarthy — on a two-year Budget and Debt Ceiling, with no poison pills,” President Trump tweeted Monday. “This was a real compromise to give another big victory to our Great Military and Vets!”

The deal was met with fierce resistance from some prominent Republicans who said that it would add too much to the debt, a backlash that will force congressional leaders to work hard this week to ensure they have enough votes for passage. The agreement also could spark concerns from some House liberals because of concessions made to the Trump administration, as both parties try to stake out positions that resonate with voters ahead of the 2020 election.

The agreement marks a significant retreat for the White House, which insisted just a few months ago that it would force Congress to cut spending on a variety of programs to enact fiscal discipline. Instead, the White House agreed to raise spending for most agencies, particularly at the Pentagon.

In exchange, White House officials received verbal assurances from Democrats that they would not seek to attach controversial policy changes to future spending bills, although it’s unclear how that commitment would be enforced.

Pelosi brokered the deal with Treasury Secretary Steven Mnuchin, whom Democrats and even some Republicans had considered the best arbiter for a compromise. White House acting budget director Russell Vought sought last week to force Democrats to commit to $150 billion in budget changes in exchange for the new spending, but his demand was rejected.

Instead, negotiators agreed to $77 billion in accounting changes that probably wouldn’t constrain any future spending. But the deal locked in more spending for the military, something Trump has tried to make a hallmark of his first 30 months as president. He has told advisers that if he is reelected, he wants to focus on spending cuts beginning in 2021, and he has largely cast aside the budget-slashing goals some of his aides have advocated since his inauguration in 2017.

“We are, I think, doing very well on debt, if you look at debt limit, however you want to define that, but we’re doing very well on that and I think we’re doing pretty well on a budget,” Trump told reporters Monday. “Very important that we take care of our military, our military was depleted and in the last two-and-a-half years we undepleted it, okay, to put it mildly, we have made it stronger than ever before. We need another big year.”

The deal would suspend the debt ceiling until July 31, 2021, meaning it probably would not need to be addressed again until the fall or winter of that year. And the agreement would set spending levels through Sept. 30, 2022.

The deal was reached as the House prepares to leave Washington at the end of this week for a six-week summer recess, giving Pelosi little margin for error to pass the legislation in a matter of days. The Senate is in session for an additional week and is expected to take up the deal next week before senators, too, head out on recess.

Many Republicans spent the bulk of the Obama administration insisting that the budget needed to shrink and calling for a constitutional amendment to balance it. A number of those lawmakers have either left in recent years or muted their criticism of Trump’s embrace of big deficits, and some GOP leaders in recent weeks have said they need to focus on passing budget deals and not getting into messy fights without a clear strategy.


By raising spending limits for the military and nondefense programs for the next two years, the White House and Pelosi have effectively erased key remnants of the 2011 Budget Control Act, which was supposed to constrain spending for a decade.

“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,” Pelosi and Schumer (D-N.Y.) said in a joint statement.

Lawmakers and the White House still must pass spending bills to fund government operations for the next fiscal year, which will begin in October, but that is considered an easier task now that budget levels have been set. The $320 billion in new spending that the White House and Pelosi agreed to represents an increase over what the reduced budget levels would have fallen to if the limits had begun next year.

The government spends more money than it brings in through revenue, and that difference is called the budget deficit. To cover the deficit, the government borrows money by issuing debt. The debt has grown from about $19 trillion when Trump took office to more than $22 trillion this month. The government must pay interest on the money it borrows, and this year it will pay more than $350 billion to finance its borrowing.

The deficit has widened since Trump took office. It was $587 billion in 2016, President Barack Obama’s last full year in office, and is projected to reach $1 trillion this year. The larger deficit is a result of higher spending and the 2017 tax cuts, which have led to a large drop in forecast revenue, according to budget experts. White House officials have argued that the combination of higher spending and tax cuts has helped the economy grow and that they plan to cut spending when the economy is on a stronger footing.

It should be noted that this agreement isn’t the end of the process. What was agreed to today was the broad outline of a budget deal meant to cover the next two Fiscal Years. Congress will still be required to pass the various appropriations bills for the Executive Branch and other government agencies and there could be some issues that delay that process. For the most part, though, that process is likely to be largely straightforward given the fact that the deal gives all the parties what they want. Well, all the parties except for the final few fiscal conservatives and deficit hawks that may be left on Capitol Hill.

The deal gives both parties something they want and something they can point out to members of their base as successes. Republicans get massive increases in defense spending that. while somewhat lower than what the President was requesting, still constitute yet another year in which we will spend even more on “defense” than we have in the past. The plan also contains increases in social spending that they can use to counteract Democratic attacks claiming that they don’t care about the middle-class and the poor. Democrats get increases in domestic spending, including spending in policy areas that they have been championing. For both parties, of course, the fact that the spending caps that were contained in the Budget Control Act of 2011, a deal that was reached after the showdown that summer over the debt ceiling which went a long way toward taming deficits in Federal spending during the remained of the Obama Presidency, are now a thing of the past means that they are now free to massively increase spending on their favorite projects going forward.

While this deal will be hailed as an example of the kind of bipartisan compromise that has seemingly been lacking on Capitol Hill for some time now, there’s plenty to be upset about in this deal. The primary problem, of course, is that the bill massively increases spending to the point where it’s virtually guaranteed that we’ll see the return of the trillion-dollar deficits that we saw during the final years of George W. Bush’s Administration and the first couple years of Barack Obama’s Administration, and in the latter case the size of the deficit was largely attributable to massively reduced tax revenue due to the Great Recession. Factor into that the impact that the tax cuts passed in December are likely to have, with the Congressional Budget Office and other independent analysts have estimated to include an additional $1.5 trillion in budget deficits over the next decade, and it’s easy to see where we’re headed.

We’ve been on this course ever since Republicans took control of the Executive and Legislative Branches after the 2016 election. Among the consequences of that power was the passage in December of 2017 of a tax “reform” package that is projected to add roughly $1.5 trillion to the national debt over the course of the next decade. This was quickly followed by the passage of a budget by a Republican Congres and White House that made clear that we were headed for a return of the era of trillion-dollar budget deficits. 

The deficit reached similar levels during the Obama Administration, which led Republicans to issue their usual calls of fiscal irresponsibility. The difference between then and now, though, is that those Obama Era deficits were primarily the result of the fact that we were still dealing with the impact of the Great Recession and that the recovery which began in 2009 was still very much in its infancy.

This time, the record-setting deficits that we are likely to see for the foreseeable future are coming at a time when the economy continues to boom during what has become one of the longest economic recoveries in history, and that they come at a time when financial markets are becoming increasingly sensitive to higher levels of debt and interest rates. When the final budget deal was put forward in mid-February of last year, it included massive spending increases in almost every budget category and busted through the controls that had been put in place by the Budget Control Act of 2011, a controversial bill passed during one of the many fiscal showdowns between former President Obama and Congress that occurred after Republicans captured the House in 2010. As The New York Times noted at the time, this effectively means that Republicans have learned to love the deficits and debt they once claimed to abhor. This is the same Republican Party, which had spent the Obama years railing about spending and deficits. In the Trump Era. that same party has become the party of deficits and debt. By April of last year, the Congressional Budget Office had officially forecast that we’d be seeing trillion dollars deficits by the end of Fiscal Year 2019 and just a few months later, the national debt crossed a new benchmark and was north of $21 trillion.

The word hypocrisy comes to mind here This, after all, is the same Republican Party that has preached the gospel of fiscal responsibility for years, the truth is that it’s entirely consistent with how the GOP has acted so many times in the past that it’s easy to lose count. For the most part, the supposed Republican fidelity to fiscal responsibility and their concern about rising Federal Budget Deficits and the National Debt is something that has proven to be little more than a political slogan that was largely based on who controlled the White House. When former Presidents Bill Clinton and Barack Obama were in power, for example, Republicans argued that out of control spending and deficits were destined to drive up interest rates, cause the national debt to explode, and increase interest rates. They used these issues as political cudgels against the Democratic White House during both Administrations and, of course, as a way to appeal to voters and supporters. Riding this wave, the GOP was able to take control of both Congress and, eventually, the White House, but then things suddenly changed.

During the Administration of George W. Bush, for example, Republicans managed to preside over massive increases in spending that were quite plainly fiscally irresponsible. On the domestic side of the equation, they introduced a massive new trillion-dollar entitlement in the form of Medicare Part D without finding a way to pay for it. Similarly, they introduced education policy legislation such as the No Child Left Behind program that led to increases in Federal spending, again without any provisions about how it was going to be paid for in the future. Under President Bush’s leadership, they authorized and fought two wars, only of which was actually justified and necessary, that imposed serious financial burdens on the Federal Government both while the war was being fought and well into the future. On top of all that, they cut taxes. While that is not a bad thing in and of itself, and I’m certainly not going to argue against the lower tax burden that I and most other Americans had during the Bush years, from the perspective of fiscal responsibility it’s an utterly insane strategy. 

This was especially true with respect to the Iraq and Afghanistan Wars. In the past, we had traditionally found ways to finance wars via what usually ended up being a combination of higher taxes and short-term debt in the form of war bonds and other means of financing. No such effort was made to do this during the Bush years even though it’s likely that the White House could have made a convincing political argument that we needed to find a way to pay for the war that was necessitated by the September 11th attacks. Instead, President Bush chose to basically let the political capital he had gained in the wake of the attacks go to waste and the Republican Party in Congress took the position of Alfred E. Neuman and adopted a “What, me worry?” when it came to fiscal responsibility. When Republicans regaining control of the White House in 2016, all those proclivities returned.

This chart demonstrates the extent to which the Budget Deficit exploded under full Republican control of the Executive and Legislative Branches:

All of this should forever put to rest the idea that Republicans care one whit about controlling either Federal spending or the size, scope, and power and government. They don’t, and the lip service they pay to the idea like “fiscal conservatism” and “limited government” is betrayed by their actions once they actually achieve the power they have asked for since Obama took office in 2009. It’s rank hypocrisy, and it was all entirely predictable. It happened under Bush 43 and it’s happening again.

Congratulations Republicans, this is what you voted for.

FILED UNDER: Congress, Donald Trump, Politicians, US Politics, , ,
Doug Mataconis
About Doug Mataconis
Doug holds a B.A. in Political Science from Rutgers University and J.D. from George Mason University School of Law. He joined the staff of OTB in May 2010. Before joining OTB, he wrote at Below The BeltwayThe Liberty Papers, and United Liberty Follow Doug on Twitter | Facebook


  1. Kathy says:

    Yes, but if Trump agreed to the deal, does that mean he agreed to the deal?

  2. michael reynolds says:

    That’ll depend on Tucker Carlson.

  3. SenyorDave says:

    Dick Cheney was only partially right when he said that the deficit doesn’t matter. It doesn’t matter when there is a Republican in the WH. When it is a Democrat, it does matter, even if the reason that there is a deficit is that a Republican busted the budget prior to the Democrat taking office.

  4. Kathy says:

    @michael reynolds:

    Wasn’t President Carlson part of the negotiations? If he has the last word on such things, shouldn’t he be involved?

  5. Teve says:
  6. Teve says:

    @SenyorDave: the amusing thing is that Cheney’s actual line implicated the previous generation of Republicans. “You know, Paul, Reagan proved deficits don’t matter” -Dick Cheney to Paul O’Neal

  7. Tyrell says:

    Senator Durbin expresses concerns about the deficit. When they start talking about the entitlements we will know that they are serious.

  8. michael reynolds says:

    We won’t know till tonight’s show. The suspense!

  9. michael reynolds says:

    No, when they start talking about taxing the rich, we’ll know they’re serious. Until then the looting continues.

    Aren’t you old enough to collect SS and Medicare? Are you the problem?

  10. mattbernius says:

    On this topic:

    CALLER: In 2019, there’s gonna be a $1 trillion deficit. Trump doesn’t really care about that. He’s not really a fiscal conservative. We have to acknowledge that Trump has been cruelly used.

    LIMBAUGH: Nobody is a fiscal conservative anymore. All this talk about concern for the deficit and the budget has been bogus for as long as it’s been around.

    Though who wants to take bets as to whether or not Limbaugh will deny saying this the moment a Democrat is in office.

  11. Daryl and his brother Darryl says:

    Just another thing, in a long list of things, that the next person in the Oval office is going to have to fix. The poor sucker that gets elected next is going to spend their entire term fixing the comb-over’s fuq-ups.
    I’m kinda po’ed at the Dems…this is so easily attacked as profligate spending. But the reality is that in the long run it’s only going to be seen as another Republican jacked up the deficit…which they always do.

  12. Teve says:

    @mattbernius: that’s a factually true statement you quoted.

  13. Kathy says:


    Rush, I hate to say it, makes one point that got me thinking. he says despite all warnings about the deficit and debt, we’re all here and no one’s been chewed up and eaten by the deficit or the debt.

    In the 1840s, president Polk used Mexico’s debts as an excuse to seize large amounts of Mexican territory in the Mexican-American War. Later in the 1860s, France under Napoleon III used the same excused, only to place an Austrian noble, Maximilian, as emperor of Mexico.

    Ok, if the US defaults on debt, what happens?

    I assume most of the debt is held in US-issued securities, such as Treasury bonds, on which interest is paid. These securities are held by private and public entities and people, like banks, mutual funds, pension funds, states, and foreign countries as well. China famously owns a large potion of that debt.

    So what is America defaults? It would mean a reduced income for many people and institutions, but what can they do? Sue the government? China wouldn’t invade the US, even if it could, over default; and neither would anyone else. The US has nuclear weapons and a very large military.

    I don’t know enough about finance and economics to say what would happen, but surely there’d be adverse consequences, like an inability for the US government to borrow money.

  14. Tyrell says:

    @michael reynolds: Yes, I confess. I am in purgatory.

  15. Teve says:

    I’ve been working all morning and I think now I’m going to plant a whole bunch of chive seeds in some new potting soil, but later I’m going to check in with some economists to see what they think of the deal.

    I’ll know more after Dean Baker and K-Thug and co. comment.

  16. Dutchgirl says:

    Republicans are not anti-spending, they are anti-spending for *those* people. And we all know which groups those are.

  17. Gustopher says:

    My instinct is that this is a mistake. This was the time to kill the debt limit, and prevent it from being used as a weapon by the Republicans in the future.

  18. Hal_10000 says:

    I’m old enough to remember when the GOP agreed to some small tax hikes in exchange for big spending cuts. We got the tightest spending constraint in a generation and the biggest reduction in the deficit in decades.

    Of course, since they made that deal with Obama, they were immediately branded “the surrender caucus” by all the right-wing chowderheads who are currently cheering them on. Because Trump said some nasty things about some Democrats, so it’s all OK.

    (Should also add: Trump is doing to the country what he did to his business partners. Making himself rich while leaving everyone else holding the bag. The deficit WILL matter one day; but he’ll be gone by then.)

  19. Teve says:

    nothing is signed yet though, and won’t be for a week or two, so if Sean Hannity gets the idea to go on TV in the next week and call this deal worse than Obamacare, all bets are off and we could have a crisis in October.

    And the numbers look like very minor spending increases, nothing to get hysterical and Chicken Little about.

  20. Teve says:

    Oooo social media has lit up now with pushback from liberals asking WTF Pelosi is thinking, arranging things such that 6 months into a Democratic president some Senate Republican assholes could instigate a debt crisis.

    (Eating popcorn emoji)

  21. DrDaveT says:


    And the numbers look like very minor spending increases, nothing to get hysterical and Chicken Little about.

    It’s not the spending levels that are the problem; it’s that we no longer have any revenues to pay for them.

    I was starting to wonder whether this isn’t actually a winning strategy in the long run — that we’ll get to the point where only a sales tax on stock market transactions could possibly save us, and so we’ll do the right thing for the wrong reason. Then again, every other plan of the form “this will back us into a corner so tight we’ll have to bite the bullet and do the right thing” has foundered on the Rock of Pandarus, so let’s not bet on this one.

  22. Just nutha ignint cracker says:


    This was the time to kill the debt limit, and prevent it from being used as a weapon by the Republicans in the future.

    That might be nice, but I’m wondering how the Democratic House manages to kill the debt ceiling without the Republican Senate going along with it. Do you have some secret plan that causes Mitch to shoot himself in the foot? And if so, what are you hoarding it in anticipation of?

  23. gVOR08 says:

    I tend to take the debt seriously. Interest rates are staying low, although no one seems to be sure just why. In the 80s when Reagan and Volcker drove interest rates up, deliberately choking the economy, debt service threatened to absorb the entire discretionary budget. If interest rates go up, the rising debt could again choke the budget. And Keynes was right, in good times we need to squirrel away money so we can do fiscal stimulus in the next downturn. We failed to do stimulus adequately last time because of Republicans generally, but also because of W’s deficits.

    That said, worrying about the deficit right now is like worrying about your water bill as you drag out your garden hose to keep the brushfire from spreading to your house. We got more immediate problems.

  24. Jax says:

    Sometime in the next couple days, somebody on Fox and Friends (or President Hannity) is gonna call Trump a wussy for going along with it, and all bets are off on the budget deal.

    Kinda like how Iran said they had 17 CIA informants, and some were sentenced to death. Trump immediately declared it not true, so I assume it IS true, and people who have given everything for this country are either already dead, or are currently being tortured by listening to Trump speeches on a never-ending cycle. I mean, forget Baby Shark.

  25. Moosebreath says:


    “Trump is doing to the country what he did to his business partners.”

    No, Trump is doing to the country what he did to Stormy Daniels.

    Only with respect to the budget can you say he is “[m]aking himself rich while leaving everyone else holding the bag.”

  26. Teve says:

    Mom-my shark, doo doo doo doo doo doo
    Mom-my shark, doo doo doo doo doo doo…

  27. Jax says:

    @Teve: Ugh….can you imagine? “Only the best people…we’re gonna Build the Wall, and Mexico’s gonna pay for it…trade wars are good and easy to win…” on a never-ending loop?! Audio alone would suck, having to stare at his spray tan AND listen to him would be even worse.

    He’s devolving right in front of us, now all he can think of is racial slurs. He may literally not even know if they captured 17 CIA assets or not, he’s just stuck on deny everything and lie.