(Bloomberg) -- Senate leaders were closing in on a budget deal Tuesday that would lift caps on defense and domestic spending and break the cycle of temporary funding bills to keep the government operating.
The negotiations in the Senate were taking place as the House was set to vote on a stopgap spending bill to keep the government open until March 23 and provide full-year funding for the Defense Department. Leaders in both parties said they don't want to bring the government to the brink of a shutdown and see little risk that it would occur.
“I think we're on our way to get in an agreement, and getting an agreement very soon,” Senate Majority Leader Mitch McConnell of Kentucky said Tuesday after lunch with GOP members.
Senate Minority Leader Chuck Schumer of New York echoed McConnell's optimism, while adding that “nothing's done yet.”
Senator John Cornyn of Texas, the chamber's second-ranking Republican, said he hopes that a budget deal would include a provision to raise the U.S. debt ceiling. The nonpartisan Congressional Budget Office predicts the Treasury can prevent a default only through early March, and Treasury Secretary Steven Mnuchin Tuesday urged Congress “to act as soon as possible.”
Congressional leaders have been discussing a two-year budget deal costs more than $250 billion. Defense caps would be raised by between $70 billion to $80 billion, while non-defense caps would be raised in the $50 billion to $60 billion range. Budget gimmicks would be used to add more domestic spending allowing Democrats to claim the cap increase treat defense and non-defense equally.
House Bill
The House bill -- the fifth stopgap for the fiscal year that started Oct. 1 -- would extend most government funding at current levels until March 23 but would lift budget caps to provide $659 billion for the Pentagon through the end of the fiscal year on Sept 30. A broader budget deal likely would be added to that legislation when it comes to the Senate. That would allow lawmakers to work out a giant appropriations measure in the coming weeks to spell out exactly how the new money will be spent.
A Senate agreement to raise domestic spending along with funding for the Pentagon would likely hit objections from conservative Republicans in the House, potentially forcing House Speaker Paul Ryan of Wisconsin to rely on Democratic votes to get the measure passed.
House Democrats are already anticipating they will have to cut short their scheduled three-day retreat beginning Wednesday afternoon in Cambridge, Maryland, to return to the Capitol for a second vote on the Senate version of the spending plan.
Expanding Deficit
The higher spending would add to an expanding federal budget deficit that Steve Bell, a former Senate Budget Committee staff director, forecast would reach as much as $1 trillion next year.
The budget shortfall grew to $666 billion last fiscal year because of higher spending on Medicare, Social Security and other programs for an aging population. The gap is expected to widen further due to tax cuts enacted this year that are projected to reduce revenue by almost $1.5 trillion over the next decade.
Even as the threat of a government shutdown was ebbing in Congress, President Donald Trump was threatening to force one if Democrats refuse to meet his demands on immigration legislation.
“I'd love to see a shutdown if we don't get this stuff taken care of,” Trump said an an event with law enforcement officials to discuss MS-13, a predominantly Latino gang whose members include undocumented immigrants.
An attempt by Democrats to add deportation protections for about 700,000 young undocumented immigrants to the last spending bill led to a three-day government shutdown. But that obstacle was removed after McConnell has said he will allow the Senate to debate an immigration bill after Friday if the government remains open, removing it as an obstacle to a budget agreement.
--With assistance from Billy House and Steven T. Dennis
To contact the reporters on this story: Erik Wasson in Washington at ewasson@bloomberg.net, Laura Litvan in Washington at llitvan@bloomberg.net.
To contact the editors responsible for this story: Joe Sobczyk at jsobczyk@bloomberg.net, Justin Blum
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