2-Year Appropriations and Debt Limit Deal Reached

2-Year Appropriations and Debt Limit Deal Reached

July 23, 2019  | Jeff Davis

July 23, 2019 (1:00 a.m.)

Later this week, the House of Representatives will consider a new bipartisan budget bill introduced last night in the House.

The deal would suspend the statutory limit on the public debt for two more years and would increase total allowable appropriations by $320 billion over two years by increasing the caps on defense and non-defense spending established by the Budget Control Act of 2021, as follows:

FY 2019 FY 2020 FY 2021 Total
Defense
Base Cap 647.0 576.2 590.2
Increase +90.3 +81.3 +171.6
New Cap 647.0 666.5 671.5
Non-Defense
Base Cap 597.0 543.2 556.1
Increase +78.3 +70.4 +148.7
New Cap 597.0 621.5 626.5
Total Increase +320.3

The deal was simultaneously announced late yesterday afternoon by a joint press release from House Speaker Pelosi and Senate Minority Leader Schumer, separate press releases from House Minority Leader McCarthy and Senate Majority Leader McConnell, and (of course) a tweet from President Trump.

At the same time that Pelosi and Schumer released their joint statement, Pelosi posted the two-page text of the so-called “term sheet” or “deal memo” that was struck between the four leaders to govern the implementation of the deal (similar to the deal memo to accompany the February 2018 two-year deal).

But the actual text of the draft legislation itself was not made public until 11:37 p.m. (A draft bill timestamped 3:15 p.m. July 22 had been making the rounds but was never made public, and the final version was timestamped 11:25 p.m. The differences between the two versions appear to be technical only.)

The House Rules Committee will meet on the bill at 3:00 p.m. tomorrow (July 24), which could put it up for a vote in the House as early as Thursday, but more likely Friday. The Senate is in session next week (while the House is not), which will give the Senate all of next week to consider the bill.

Bill contents.

What is in the legislation:

  • Appropriations cap increases totaling $320 billion over two years – for the defense category, $90.3 billion in FY 2020 and $81.3 billion in FY 2021, and for the non-defense category, $78.3 billion in FY 2020 and $70.4 billion in FY 2021.
  • A further statutory limitation on Overseas Contingency Operations appropriations outside the spending caps – for defense, $71.5 billion in FY 2020 and $69.0 billion in FY 2021, and for non-defense, $8.0 billion per year in both years. (This means that total cap + OCO defense in 2020 will be $738 billion, which is a bit less than the $750 billion Republicans wanted.)
  • A suspension of the debt ceiling through July 31, 2021.
  • Permission for the House and Senate Budget Committees to enforce budget discipline in fiscal years 2020 and 2021 even if Congress never passes a Congressional budget resolution, through enforcing the above appropriations caps and the latest Congressional Budget Office baseline for mandatory spending and revenues.
  • A new one-time-only spending cap adjustment for the 2020 Census – but only in the amount of $2.5 billion for FY 2020, not $7.5 billion for FY 2020 as House Democrats had proposed.
  • The same kind of eight-years-down-the-road “pay fors” used in past budget deals – in this case, extensions of mandatory budget sequestration and expiring Customs fees into fiscal years 2028 and 2029, which the Congressional Budget Office estimates will save $77.4 billion in those years.

What is not in the legislation:

  • There is no extension of the BCA spending caps past their scheduled expiration at the end of FY 2021. This means no more caps, unless they are brought back from the dead as part of the 2021 debt ceiling deal.
  • There is no mention of the July 1, 2020 $7.6 billion highway contract authority rescission scheduled to take effect by the FAST Act. (The bipartisan leaders of the House Transportation and Infrastructure Committee wrote to Speaker Pelosi in May asking her to use the budget deal to cancel the rescission.)
  • There is no new budgetary exemption or special treatment for the Harbor Maintenance Trust Fund, which Senate Appropriations chairman Richard Shelby (R-AL) has been diligently trying to muscle into the last several omnibus appropriations packages or budget deals, and which was also mentioned in the T&I letter.
  • There is no new budgetary exemption or special treatment for funding the VA MISSION Act of 2018, which the Appropriations Committees at the time (and since) viewed as a way to stick them with the costs of implementing a popular but unfunded bill that should have had non-appropriated funding in the first place.
  • There is no new budgetary cap adjustment for IRS enforcement, as House Democrats had proposed.

Deal memo. 

The new “deal memo” differs from the one for the 2018 deal in several key ways:

  • While the 2018 deal memo promised specific amounts of money from the cap increases for specific priorities – $10 billion per year for infrastructure, $3 billion per year for opioids, $2 billion for the VA healthcare maintenance backlog, $1 billion per year for NIH, etc. – the new deal memo does not make specific promises of dollar amounts.
  • The new deal memo says “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 nonappropriations measures unless agreed to on a bipartisan basis by the four leaders with the approval of the President.” Nothing like that was in the 2018 deal memo.
  • For each of the FY 2020 and FY 2021 cycles, the new deal memo says “The President, Congressional leaders and the leadership of the Appropriations Committees shall work together to reach bicameral and bipartisan agreement on the orderly and timely consideration of appropriations bills to avoid a government shutdown, and a 12-bill omnibus.” The 2018 deal memo did not specify into how many packages the FY 2019 bills should be grouped, which led to some House-Senate tension.

Implications of the deal memo.

The fact that the deal memo says that there should be “no poison pills” and no “additional riders” relative to the FY 2019 enacted laws could be a big problem for the House. In the Senate, since chairman Shelby took over in April 2018, he has worked very closely with his ranking minority member Patrick Leahy (D-VT) to move bills through the committee and the Senate on a bipartisan basis. This has meant working with Leahy on overall dollar amounts, but Shelby and Leahy have also agreed to hold the line and oppose new policy provisions from riding on the appropriations bills unless they were legitimate restrictions on appropriations that were in the FY 2018 omnibus appropriations bill (which was enacted just before Shelby became chairman).

In the FY 2019 cycle, this meant that Shelby and Leahy largely resisted efforts by the Republican-controlled House to change current policy via the appropriations process. But now that Democrats control the House, it was always assumed that Shelby and Leahy would work just as hard this year to oppose House policy changes as they did last year. (Leahy memorably negotiated a bipartisan border funding deal with Shelby that did not contain many of the new policy provisos being sought by House Democrats that would have drawn a veto threat from the White House.) The deal memo indicates that all four Congressional leaders, and President Trump, are endorsing this approach.

The transportation title of the Transportation-HUD bill is a particularly amusing mirror image in 2020 from what it was in 2019. Last cycle, House Republicans pushed a bill containing new trucking policies supported by the trucking industry, and new provisions killing the California high-speed rail project, only to be resisted by the Senate. In the current cycle, House Democrats are pushing a bill containing new trucking policies opposed by the trucking industry, and new provisions preventing the Trump Administration from killing the California high-speed rail project, only to be resisted (presumably) in the Senate and now to fall afoul of what seems like a pretty clear prohibition on “additional riders.”

(Besides the trucking and California HSR provisions, other items in the FY 2020 House bill which would seem to violate a “no new riders that were not in the FY 2019 law” policy include the DeFazio (D-OR) amendment adopted on the House floor relating to LNG train permits, the provision preventing the Trump Administration from rolling back increased CAFE standards, and the provision amending title 23 to declare TIFIA loans to be non-federal commitments for new start projects. But what is and what is not a “rider” may vary in the eye of the beholder, as will what constitutes a “poison pill.”)

Outlook.

Despite the higher defense levels, a number of conservative Republicans are expected to oppose the legislation because so little of the spending increase is paid for (even eight to ten years hence). And a number of progressive Democrats are expected to oppose the legislation because they don’t want to give up their leverage of using the 2020 and 2021 appropriations bills to force policy concessions from Trump on abortion, immigration, and many other issues. But four-way support from party leaders, and the support of the President (unless he changes his mind) would seem to indicate that the legislation has a better than average chance of becoming law before the Senate leaves for the August recess.

Perspective.

The following chart shows the basic BCA non-defense spending cap levels (after the caps had been reduced following the failure of the “SuperCommittee” on deficit reduction to agree on any ways to reduce the deficit) under the proposed new deal, contrasted with the money added by the three previous cap increase deals in 2013, 2015 and 2018.

To download a one-page table showing the entire history of the BCA spending caps, from their creation in 2011 through their revisions in 2012, Joint Committee failure, and the 2013, 2015, 2018 and proposed 2019 budget deals, click here.

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