President Trump and congressional leaders have struck a bipartisan deal on a two-year federal spending plan, and while all the details are not clear, three big takeaways are.

First, a deal beats no deal. Before the agreement, the government was on its way to running out of legal borrowing authority, and, therefore, cash, by September. The agreement avoids the debt default that might have resulted, by extending the federal debt limit through mid-2021. Setting spending caps for all defense and nondefense discretionary programs, totaling roughly $1.35 trillion per year through fiscal 2021, the agreement banishes the specter of mandatory across-the-board cuts known as sequestration, as well as the prospect of another government shutdown. In tumultuous political times, these truces provide a welcome measure of stability and predictability. To that minimal extent, the system worked.

The second, far less optimistic point is that compromise proved possible only on the basis of the lowest common denominator: Both parties get to spend more on pet priorities, without offsetting spending cuts or tax increases. The Democrats, in control of the House and of enough Senate seats to mount a filibuster, leveraged a $27 billion increase for next year in nondefense discretionary programs; the Republicans got $22 billion more in defense spending and, of course, no new revenue. Those elevated levels would then apply the year after as well. The White House dropped its earlier demands for $150 billion in lower spending over 10 years, in return for a Democratic promise not to attach policy conditions to appropriations bills, plus a handful of promised savings that don’t take effect until 2027.

To govern is to choose; both political parties basically chose not to. The deal could increase projected deficits by $1.7 trillion over the next decade, according to the Committee for a Responsible Federal Budget — on top of the $1.5 trillion debt increase already wrought by the GOP’s 2017 tax cuts. With a historic political struggle looming next year, Mr. Trump and Senate Majority Leader Mitch McConnell (R-Ky.) proved unwilling to spend a nickel’s worth of political capital on debt control. This may have been the pragmatic course, but historians will still record that, under Mr. Trump’s leadership, the budget deficit increased by double-digit percentages each year — despite robust economic growth — while the Republican Party abandoned even the pretense of fiscal responsibility. Now, the GOP will campaign in 2020 as the party of debt-financed military spending, and Democrats as the party of debt-financed domestic spending, reinforcing the unhealthy notion that certain functions of the national government belong to this or that party, not everyone.

Which brings us to the deal’s third implication: While postponing a budget reckoning, the deal also changes the terms under which the next battle will take place. When this agreement expires on Sept. 30, 2021, there will be no more budget caps. The 2011 law that created the sequestration threat will be a thing of the past, too. The winners in the 2020 election will be that much less inhibited to borrow and spend than they are now.

-The Washington Post

July 23, 2019