As Congress approached the August recess, the high level of government borrowing and spending had caused the issue of the debt ceiling to loom large.
What is the debt ceiling?
The debt ceiling is an upper limit set on the amount of money that a government may borrow. The debt ceiling is set by law, but can be suspended or extended by law as well. On March 2, the debt ceiling was reinstated after a one-year suspension. Ever since, the Treasury has been struggling to pay the government’s bills on time.
Along came the Bipartisan Budget Act of 2019
Congress and the Administration have agreed to pass the Bipartisan Budget Act of 2019, H.R. 3877. The legislation would suspend the debt ceiling law until July 2021, enabling the government to continue borrowing and paying its bills, and raise the spending caps that would have automatically cut federal spending by $125 billion in the fiscal year beginning October 1.
While not in the bill’s text, the deal also includes an agreement that the 12 annual spending bills will not include new policy riders or changes to authority, such as curbing the administration’s ability to shift money to pay for border wall construction, unless there is bipartisan agreement on those issues.
Once enacted, the package paves the way for passage of the dozen spending bills that fund federal government operations. The House passed the bill by a vote of 284 to 149, and the Senate passed it 67-28. The President has tweeted that he will sign the legislation.
- Good News: The package would suspend the debt ceiling, thereby preventing a default on the full faith and credit of the United States. It would also effectively repeal sequestration, the automatic, across-the-board spending cuts process enacted in the Bipartisan Budget Act of 2011. And to the benefit of the charitable, religious, and philanthropic community, the deal means that there will be no attempts to insert anti-Johnson Amendment language into appropriations bills for fiscal year 2020 and perhaps 2021, meaning that nonprofits will remain protected from politicization.
- Bad News: The legislation adds significantly to the federal deficit — adding $2 trillion to the $22 trillion debt in just two years — and only postpones making very tough revenue and spending decisions. That’s why Utah’s two senators came out against the measure, as well as two of our four congressional reps: Rep. Curtis (R) and Rep. McAdams (D). The Deseret News Editorial Board condemned the agreement to raise spending and push the tough budget decisions past the election. Leon Panetta, a defense secretary under former President Obama who now co-chairs the Committee for a Responsible Federal Budget, responded to the budget deal by saying, “Both sides this week so easily agreeing to fiscal defeat isn’t bipartisanship, it is broken governance.”
The federal deficit
The Congressional Budget Office reported that the federal government generated an $8 billion deficit in June, the ninth month of Fiscal Year 2019, for a total deficit of $746 billion so far this fiscal year.
To get the latest news on the federal deficit, use this Deficit Tracker from the Bipartisan Policy Center.