US aims to head off shutdown with budget agreement
A two-year budget agreement has been reached in the US, in a bid to avert the possibility of another government shutdown and the first-ever federal default which would send shockwaves through global markets.
President Trump announced on Monday that the administration had reached an agreement with the House of Senate leaders to lift spending caps and raise the debt ceiling, avoiding the immediate prospect of the government defaulting on its loans.
If passed, the deal would raise discretionary spending at non-defence agencies by $56.5bn to the end of the 2021 financial year, while defence spending would increase by $46.5bn over the same period. It would also avoid $125bn in automatic spending cuts that would have taken place in fiscal year 2020, had Congress not acted. Lawmakers agreed to offset about $77bn through increases to customs user fees and extending automatic cuts to mandatory spending.
The budget agreement follows a letter Treasury secretary Steven Mnuchin sent to Democrat speaker of the House of Representatives, Nancy Pelosi, last week, in which he said projections suggested the government could run out of money in early September and urged Congress to increase the debt ceiling before it leaves for summer recess, a move which hurried negotiations.
Following the talks, Pelosi and senate minority leader Chuck Schumer said in a joint statement: “With this agreement, we strive to avoid another government shutdown, which is so harmful to meeting the needs of the American people and honouring the work of our public employees.” They added that they were pleased the agreed increase in non-defence budget authority “exceeds the defence number by $10bn over the next two years”.
No “poison pills”
Trump announced the deal in a tweet, in which he said that there would be no “poison pills”, suggesting that the bill would receive sufficient support from Democrats and Republicans to pass both chambers.
The two-year spending deal and the federal borrowing limit had previously been up in the air, as Democrats and Republicans argued over military spending increases, domestic spending limits and the Mexico border wall.
Now an agreement has been reached, Congressional Democrats said they will work with Republicans to quickly pass appropriations bills, setting funding at agencies across government in line with the new deal. Lawmakers will have to race to agree on how to allocate the money before 1 October, when current spending mandates expire.
While the budget, if passed, would avert a financial crisis in the short term, it will add to an already surging deficit. National debt has increased by $3 trillion since President Trump took office, while the federal budget deficit has grown 23.1% in the first nine months of the fiscal year compared with the same period a year ago, taking it to a total of $747.1bn.
About Mia Hunt
Mia is a journalist and editor with a background in covering commercial property, having been market reports and supplements editor at trade title Property Week and deputy editor of Shopping Centre magazine, now known as Retail Destination. She has also undertaken freelance work for several publications including the preview magazine of international trade show, MAPIC, and TES Global (formerly the Times Educational Supplement) and has produced a white paper on energy efficiency in business for E.ON. Between 2014 and 2016, she was a member of the Revo Customer Experience Committee and an ACE Awards judge. Mia graduated from Kingston University with a first-class degree in journalism and was part of the team that produced The River newspaper, which won Publication of the Year at the Guardian Student Media Awards in 2010.
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I don’t know where you got the information that a 2 year budget has been passed in the US. Just so you know, it has not been, and won’t be before Congress adjourns for a month. Hopefully, in Sept, when they return, the 2 Branches (House and Senate), will be able to come to a consensus that trump will sign. Stay tuned……..
Barbara Turner