On Monday, July 22, 2019, all parties agreed to a two-year budget deal for fiscal years 2020 and 2021. On Thursday of last week, the House of Representatives went first and gave the first approval. If all goes as planned, the Senate will follow this week and send the agreement to the President and Congress will be gone for the month of August.

The budget agreement suspends the debt ceiling until July of 2021 well into the next administration or this President’s next term. In addition, the bargain will set higher spending levels for this upcoming fiscal year, 2020 (starting on October 1, 2019) and for the fiscal year 2021. The deal provides an increase in both defense spending and non-defense spending for each of the two years. Defense Department spending will increase to $738 billion for 2020, and non-defense spending will increase to $632 billion. The increases are $22 billion and $27 billion respectively. The total discretionary spending will increase by $56 billion over two years of the package. The agreement largely negotiated by Secretary of Treasury Steve Mnuchin and Speaker Nancy Pelosi (D-CA) also includes some limited “offsets” or spending reductions, but they don’t seem to raise controversy.

The agreement will be the last under the ten-year Budget Control Act of 2010, which President Obama and Speaker John Boehner (R-OH) negotiated with annual caps that tied a sort of parity in spending levels between the two broad categories. The next administration or this President will have to debate what the future budget landscape looks like after the 2020 elections with deficits hitting approximately $1 trillion a year now.

Congress still must act on appropriations for FY 2020, which will start less than a month after they return from the summer break. The House has passed ten of their bills while the Senate had been in a holding pattern on all the 12 bills due to a lack of agreement. The month of August, however, will include a lot of work between the two sides to determine appropriations for all 12 bills. The deal struck included an agreement not to include “poison pill” amendments –amendments that have drawn a hard line in the sand by either side. It is very possible there will be some continuing resolution (CR) passed in September to add more time to finish the bills, but with a spending ceiling set, such a CR will likely be without controversy. The agreement also makes it likely that next year’s budget and appropriations will move without too much debate before the next presidential election.