LOS ANGELES TIMES
WASHINGTON — White House officials and congressional leaders have reached a deal to lift the nation’s debt limit and boost federal spending by about $320 billion over limits set in a 2011 budget law.
President Donald Trump announced the agreement with the four congressional leaders on Twitter, calling it a “real compromise in order to give another big victory to our Great Military and Vets!”
The deal, assuming it moves forward, would prevent the country from defaulting on its debt — calamitous for the financial markets — and raise the nation’s borrowing capacity for about two years.
The plan would also reverse massive, automatic spending cuts to federal programs — known as the sequester, according to congressional sources.
The agreement, crafted largely between House Speaker Nancy Pelosi, D-Calif., and Treasury Secretary Steven Mnuchin, would mark an end to cuts mandated under the bipartisan 2011 budget deal. The annual cuts — which expire in 2021 — were designed to control federal spending by requiring painful reductions for both sides.
But they never took full effect and now they probably never will. Lawmakers in both parties, concerned about the effect on domestic and defense programs, have reversed them in every budget deal reached since 2013.
Conservatives are likely to balk. The deal could amount to a significant blow to acting chief of staff Mick Mulvaney, who has advocated for limited federal spending since he was in Congress. He has been largely sidelined in the talks by congressional Republicans who don’t like the spending caps.
The White House originally wanted to offset the new spending with about $150 billion in cuts. But the impending deal would be offset by only about $75 billion, according to a congressional aide. Negotiators are considering extending automatic cuts to Medicare and new Customs and Border Protection fees to help pay for it.
House leaders are racing to complete the agreement before House members depart Washington at the end of the week until after Labor Day. The Senate is slated to leave a week later.
If the deal is not approved by Congress this week, lawmakers have floated the idea of a short-term extension to prevent the country from defaulting on its debt while Congress is away from Washington.