The White House and congressional leaders reached a two-year budget agreement late Monday that raises the debt ceiling and federal spending caps.
It also permanently ends the threat of sequester and another government shutdown by removing funding caps set in 2013, House Speaker Nancy Pelosi, D-Calif., and Senate Minority Leader Chuck Schumer, D-N.Y., said in a joint statement.
The agreement calls for suspending the debt limit until July 31, 2021, allowing the federal government to continue borrowing until after the 2020 elections. It also would avert $125 billion in automatic spending cuts that were set to kick in for fiscal year 2020 without a deal.
Under the agreement, discretionary spending at non-defense agencies would increase by $27 billion in fiscal 2020 and defense spending would increase by $22 billion.
The federal government faced a debt ceiling crisis and the prospect of running out of money later this year. The Bipartisan Policy Center forecast that the debt limit "X Date" — the date when the federal government can no longer pay all of its bills in full and on time — could come in early September. The group cited sluggish federal revenues for fiscal year 2019, overall revenue growth of less than 3% and weaker-than-expected corporate income tax collections related to the 2017 tax cuts.
Maya MacGuineas, president of the advocacy group Committee for a Responsible Federal Budget, called the deal "a total abdication of fiscal responsibility by Congress and the president." But the Center on Budget and Policy Priorities, a progressive think tank that analyzes federal and state government budget policies, noted that the agreement provides a path for Congress and the administration to deal with annual appropriations bills "without the disruptive brinksmanship and uncertainty that have become all too common."
The House is expected to vote on the deal this week, and Senate Majority Leader Mitch McConnell, R-Ky., expected the Senate to vote before its August recess.