MercoPress. South Atlantic News Agency

Trump and Congress agree to suspend the debt limit until after the 2020 election

Trump tweeted that the deal was struck between the White House and the top Democratic and Republican leaders in both chambers of Congress

US President Donald Trump said on Monday that a “compromise” bipartisan budget agreement has been reached that will boost federal spending by US$320 billion and suspend the debt limit beyond the next presidential election.

The deal, should it pass Congress as expected, would allow the federal government to borrow more money and avoid a disastrous default in the coming months, while significantly raising budget caps on defense and domestic outlays.

Trump tweeted that the deal was struck between the White House and the top Democratic and Republican leaders in both chambers of Congress “on a two-year Budget and Debt Ceiling, with no poison pills,” which could have otherwise derailed the legislation.

The agreement raises the discretionary spending caps for fiscal years 2020 and 2021, pairing it with a suspension of the statutory debt ceiling until the end of July 2021, nearly nine months after the 2020 election.

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

The agreement has faced resistance from conservative Republicans who oppose adding hundreds of billions of dollars in additional spending to the US debt.

Democratic leaders hailed it as a victory for securing robust funding for critical domestic priorities, describing the deal as the largest-ever increase in base funding above the so-called sequestration levels set forth in a 2011 law.

“With this agreement, we strive to avoid another government shutdown, which is so harmful to meeting the needs of the American people and honoring the work of our public employees,” House Speaker Nancy Pelosi and Senate Minority Leader Chuck Schumer said in a joint statement.

The compromise, with its boosted spending and narrow savings, is expected to push the annual budget deficit to more than US$1 trillion next year.

Shortly before the deal was announced, David McIntosh, president of the conservative, pro-free-enterprise group Club for Growth, said Mnuchin “would best serve @realDonaldTrump if he insists on a better #spendingdeal that doesn't bankrupt our country.”

Some conservatives in Congress also expressed discomfort with the extra red ink, especially given the soaring deficit.

“I encouraged President Trump yesterday to hold the line in the budget negotiations,” said congressman Mike Johnson, who chairs the conservative House Republican Study Committee.

The Democratic-led House goes on summer break Jul 26, but the Senate, controlled by Trump's Republicans, is in session for an additional week.