Trump, Democrats clinch two-year budget deal

President Trump and Speaker Nancy Pelosi (D-Calif.) reached a two-year budget deal Monday that also suspends the debt ceiling through July 2021, capping days of furious negotiations.

The agreement, spearheaded by Pelosi and Treasury Secretary Steven Mnuchin, sets the top-line numbers for overall defense and nondefense spending for fiscal 2020 and 2021.

“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,” Trump tweeted.

{mosads}It’s a significant win for Mnuchin and Pelosi, who have spoken several times over the past two weeks, as well as for Kentucky Republican McConnell, who took a back seat in the talks but had been pushing the White House to accept a two-year deal.

The deal is likely to face considerable pushback from conservatives and budget hawks, who were already lining up to urge Trump to reject the agreement before it was formally announced Monday.

The Committee for a Responsible Federal Budget (CRFB), a fiscally conservative advocacy group, said before the deal was announced that it had the potential to be “the worst budget agreement in our nation’s history.”

“If this deal passes, President Trump will have increased discretionary spending by as much as 22 percent over his first term and enshrine trillion-dollar deficits into law,” said CRFB President Maya MacGuineas.

CRFB estimated that the deal could add as much as $2 trillion to deficits over the decade.

House Republican Conference Vice Chairman Mark Walker (N.C.), tweeted out a gif of Heath Ledger’s Joker surrounded by burning stacks of money following the deal’s announcement. And Rep. Kevin Brady (Texas), the top Republican on the Ways and Means Committee, said he was going to introduce legislation to rein in spending.

The agreed-upon package includes enough sweeteners for both sides to claim victory, including a bump in defense spending — a top priority for Republicans — and the domestic priorities touted by Democrats.

“This was a real compromise in order to give another big victory to our Great Military and Vets!” Trump added in a follow-up tweet.

The president didn’t offer any details on what the spending levels would be for the next two fiscal years.

{mossecondads}According to Democratic aides, the top-line for defense spending would be $738 billion and $740 billion for the 2020 and 2021 fiscal years, respectively. Nondefense spending would be $632 billion for fiscal 2020 and $634.5 billion for fiscal 2021. 

“A bipartisan agreement has been reached that will enhance our national security and invest in middle class priorities and well being of the American people,” Pelosi and New York Democrat Schumer said in a joint statement. 

“The House will now move swiftly to bring the budget caps and debt ceiling agreement legislation to the floor, so that it can be sent to the president’s desk as soon as possible,” they added.

The totals are significantly different than Trump’s fiscal 2020 request, which had top-line defense at $750 billion and $567 billion in nondefense. The totals are higher than the current fiscal 2019 levels, which were $716 billion for defense and $620 billion for nondefense.

Overall, the deal adds more than an additional $100 billion in new spending over the fiscal year 2019 levels, according to a senior Democratic aide. 

Without a budget deal, steep across-the-board cuts known as sequestration were expected to take effect in January. 

A source familiar with the negotiations said the agreement includes “strong language” on preventing poison-pill riders, or provisions that would be non-starters for either party; more than $20 billion for the VA Mission Act under the budget caps; and $77 billion in cuts or revenue-raisers to help pay for the agreement.

Each of those provisions is likely to be cited as a win by Republicans. The White House had wanted at least $150 billion to help pay for the bill, though that figure was expected to be negotiated downward. 

“I am glad the administration and Speaker Pelosi have reached a two-year funding agreement that secures the resources we need to continue rebuilding our armed forces. The next step is for the House and the Senate to pass this agreement so that President Trump can sign it into law,” McConnell tweeted.

McCarthy, who is close to Trump, touted the agreement, saying it “locks out” attempts by Democrats to include poison pills in government funding bills later this year. 

“While this deal is not perfect, compromise is necessary in divided government. Speaker Pelosi should put this on the floor so the President can sign it into law,” he added. 

Democrats, meanwhile, pointed specifically to money for the 2020 census. A senior Democratic aide said they secured $2.5 billion “to help ensure everyone is counted.”

The deal also includes new opioid epidemic funding, an increase in the National Institutes of Health budget and additional money for the Child Care Development Block Grant, according to the aide.

A number of House Republicans have expressed strong reservations about the deal, with one senior member noting it’s not just the far-right flank that has concerns. 

The GOP lawmaker said members have taken issue with the process in which the deal has come together, noting the House did not pass a budget.

“Why have members of Congress if you’re just going to do it yourself,” the source told The Hill. “I did not get so much as a phone call from the White House.”

But Mnuchin and members of leadership were in close contact Sunday and Monday as they finalized the agreement.

Mnuchin and Pelosi spoke three times on Sunday, according to an aide. They also talked on Monday morning and again at 4:35 p.m. to go over “final issues.” At 5 p.m., Mnuchin held a call with Pelosi, Schumer, McConnell and McCarthy, where he advised them that Trump would tweet about the agreement within the hour.

Republicans are hopeful that with Trump’s endorsement most of the party will back the agreement.

Sen. John Cornyn (R-Texas), asked about conservative pushback ahead of the deal’s announcement, said Republicans need “to get an indication that the president’s OK with it and that he would sign it.”

Asked how Republicans that back the deal could prevent Trump from being swayed by conservative voices, he demurred.

“I don’t know. I think somebody needs to calmly and clearly lay out the alternatives, because we saw what happened last time,” Cornyn said.

When asked how confident he was that Trump wouldn’t change his mind, Senate Appropriations Committee Chairman Richard Shelby (R-Ala.) said, “I hope he would stay for it.”

Juliegrace Brufke and Niv Elis contributed. Updated 8:12 p.m.