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The bill suspends the debt ceiling until July 31, 2021 and increases spending levels for two years to $1.37 trillion in FY2020 and $1.375 trillion in FY2021.

Budget Deal Becomes Law, Facilitates Appropriations Process

  • 2019-08-09T05:18:00.000+0000
  • Washington DC
  • Author: Laure Fabrega

On August 2, the President signed H.R.3877, the Bipartisan Budget Act of 2019, a budget deal reached between House Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin which suspends the debt ceiling until July 31, 2021 and increases spending levels for two years to $1.37 trillion in FY2020 and $1.375 trillion in FY2021, an increase from $1.321 trillion this year.

The bill avoids sequestration cuts that would have reduced domestic spending by $55 billion and military spending by $71 billion, compared with FY2019 levels. Republicans secured $738 billion in FY2020 and $741 billion in FY2021 for defense spending, while Democrats secured $632 billion in FY2020 and $635 billion in FY2021 for domestic spending.

By raising the caps on discretionary spending in FY2020 and FY2021, Congress permanently does away with discretionary sequestration as the Budget Control Act’s (BCA) discretionary limits were set to expire after FY2021. However, the bill does not completely end sequestration: it actually extends mandatory sequestration through FY2029 (currently FY2027), which affects Medicare, although Medicare benefit payment reductions will be capped at 2 percent.

The House passed the bill on July 25 by a 284-149 vote followed by the Senate on August 1 by a 67-28 vote. The Senate will now start work on its appropriation bills. While the House has approved all of its spending bills, except for Homeland Security and Legislative Branch, under its own spending caps, the Senate had been waiting for a budget deal to begin work on any of its spending bills.

Senate Appropriations Subcommittees will work on the bills during the August recess with the intent to start markups in September. The risk of a government shutdown remains as Congress must pass all spending bills before the end of September. A continuing Resolution (CR) is still likely to give Congress additional time to bring all the bills to the floor.