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Trump, Democrats Strike Deal  07/22 18:14

   Deal Sealed on Federal Budget, Ensuring No Shutdown, Default

   The deal, announced by President Donald Trump on Twitter and in a statement 
by Democratic House Speaker Nancy Pelosi and Senate Democratic leader Chuck 
Schumer, will restore the government's ability to borrow to pay its bills past 
next year's elections and build upon recent large budget gains for both the 
Pentagon and domestic agencies.

   WASHINGTON (AP) -- President Donald Trump and congressional leaders 
announced late Monday they had struck a critical debt and budget agreement. The 
deal amounts to an against-the-odds victory for Washington pragmatists seeking 
to avoid politically dangerous tumult over the possibility of a government 
shutdown or first-ever federal default.

   The deal, announced by Trump on Twitter and in a statement by Democratic 
House Speaker Nancy Pelosi and Senate Democratic leader Chuck Schumer, will 
restore the government's ability to borrow to pay its bills past next year's 
elections and build upon recent large budget gains for both the Pentagon and 
domestic agencies.

   "I am pleased to announce that a deal has been struck," Trump tweeted, 
saying there will be no "poison pills" added to follow-up legislation. "This 
was a real compromise in order to give another big victory to our Great 
Military and Vets!"

   Pelosi and Schumer said the deal "will enhance our national security and 
invest in middle class priorities that advance the health, financial security 
and well-being of the American people."

   They claimed credit for winning more than $100 billion worth of spending 
increases for domestic priorities since Trump took office.

   The agreement is on a broad outline for $1.37 trillion in agency spending 
next year and slightly more in fiscal 2021. It would mean a win for lawmakers 
eager to return Washington to a more predictable path amid political turmoil 
and polarization, defense hawks determined to cement big military increases and 
Democrats seeking to protect domestic programs.

   Nobody can claim a big win -- though they did -- but both sides view it as 
better than a protracted battle this fall that probably wouldn't end up much 
differently.

   However, it also comes as budget deficits are rising to $1 trillion levels 
-- requiring the government to borrow a quarter for every dollar the government 
spends -- despite the thriving economy and three rounds of annual Trump budget 
proposals promising to crack down on the domestic programs that Pelosi is 
successfully defending now. It ignores warnings from deficit and debt scolds 
who say the nation's fiscal future is unsustainable and will eventually drag 
down the economy.

   "This agreement is a total abdication of fiscal responsibility by Congress 
and the president," said Maya MacGuineas, president of the Committee for a 
Responsible Federal Budget, a Washington advocacy group. "It may end up being 
the worst budget agreement in our nation's history, proposed at a time when our 
fiscal conditions are already precarious."

   The aides who spoke Monday about the emerging deal did so on the condition 
of anonymity because they were not authorized to speak on the record before a 
deal was final.

   A push by the White House and House GOP forces for new offsetting spending 
cuts was largely jettisoned, though Pelosi, D-Calif., gave assurances about not 
seeking to use the follow-up spending bills as vehicles for aggressively 
liberal policy initiatives.

   Fights over Trump's U.S.-Mexico border wall, other immigration-related 
issues and spending priorities will be rejoined on follow-up spending bills 
that are likely to produce much the same result as current law. The House has 
passed most of its bills, using far higher levels for domestic spending. Senate 
measures will follow this fall, with levels reflecting the accord.

   At issue are two separate but pressing items on Washington's must-do agenda: 
increasing the debt limit to avert a first-ever default on U.S. payments and 
acting to set overall spending limits and prevent automatic spending cuts from 
hitting the Pentagon and domestic agencies in January.

   The threat of the automatic cuts represents the last gasp of a failed 2011 
budget and debt pact between former President Barack Obama and then-Speaker 
John Boehner, R-Ohio, that promised future spending and deficit cuts to cover a 
$2 trillion increase in the debt. But a bipartisan deficit "supercommittee" 
failed to deliver, and lawmakers were unwilling to live with the follow-up cuts 
to defense and domestic accounts. This is the fourth deal since 2013 to reverse 
those cuts.

   Prospects for an agreement, a months-long priority of top Senate Republican 
Mitch McConnell, R-Ky., became far brighter when Pelosi returned to Washington 
this month and aggressively pursued the pact with Treasury Secretary Steven 
Mnuchin, who was anointed lead negotiator instead of more conservative options 
like acting White House Chief of Staff Mick Mulvaney or hardline Budget 
Director Russell Vought.

   Mnuchin was eager to avert a crisis over the government's debt limit. 
There's some risk of a first-ever U.S. default in September, and that has added 
urgency to the negotiations.

   The pact would defuse the debt limit issue for two years, meaning that Trump 
or his Democratic successor would not have to confront the politically 
difficult issue until well into 2021.

   Details on spending levels have been kept under wraps so far, but the 
complicated accounting under Washington's arcane budget rules gives each side a 
way to paint the numbers favorably. Generally speaking, the deal would lock in 
place big increases won by both sides in a 2018 pact driven by the demands of 
GOP defense hawks and award future increases consistent with low inflation.

   Pelosi was positioned to claim rough parity between increases for defense 
and nondefense programs, but the veteran negotiator retreated on her push for a 
special carve-out for a newly reauthorized program for veterans utilizing 
private sector health care providers.

   In the end, domestic programs would on average receive 4% increases in the 
first year of the pact, with much of those gains eaten up by veterans increases 
and an unavoidable surge for the U.S. Census. Defense would jump to $738 
billion next year, a 3% hike.

   Trump retains flexibility to transfer money between accounts, which raises 
the possibility of attempted transfers for building border barriers.

   The results are likely to displease many on both sides, especially 
Washington's weakening deficit hawks and liberals demanding greater spending 
for progressive priorities. But Pelosi and McConnell have longtime histories 
with the Capitol's appropriations process and have forged a powerful alliance 
to deliver prior spending and debt deals.

   The measure would first advance through the House this week and win the 
Senate's endorsement next week before Congress takes its annual August recess.

   Pelosi and Schumer say the House will move "swiftly" to bring the package up 
for a vote. The Senate is expected to follow. They hope to send it to the 
president "as soon as possible."

   Majority Leader Mitch McConnell is promising the Senate will vote on the 
budget deal agreed to by congressional leaders and the White House before 
senators leave town for the August recess.

   The Republican leader said Monday he's "very encouraged" by the agreement 
reached by Trump and Pelosi.

   McConnell says the "reality of divided government means this is not exactly 
the deal Republicans would have written on our own."

   But he says all sides have made "enormous strides" funding national defense 
recently and the deal "is what we need to keep building on that progress."


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