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CLSA Wire

House Democrats and White House Reach an Agreement on Budget Caps & Debt Ceiling

By Molly Fishman & Dani Mitchell
July 25, 2019

After reaching a deal with the White House, on Thursday, July 25 – a day before Congress departs for the August District Work Period – the House of Representatives voted 284 to 149 to pass a bipartisan two-year budget and to extend the debt limit through July 31, 2021.

The Senate is anticipated to vote on the measure next week before recessing on August 2. While there were rumored to be $115 billion in dangerous pharmaceutical sector-related offsets (“Pay-fors”) on the table for discussion during negotiations, we are pleased to report that due to the engagement of the innovative life sciences community and with support from champions in Congress, all of these provisions were excluded from the final agreement.

Speaker of the House Nancy Pelosi (D – San Francisco) led budget negotiations with the White House and was the driver of coupling an increase in government spending levels with raising the debt ceiling. Congress had been working to reach an agreement before the start of the new fiscal year on October 1, 2019. However, negotiations were sped up after U.S. Treasury Secretary Steve Mnuchin warned that the debt ceiling would be reached in early September before Congress returned to Washington, D.C.

The topline elements of the agreed upon budget deal include:

(1) a two-year budget eliminating the scheduled across-the-board sequester cuts; (2) extending the debt limit until July 31, 2021; (3) increasing the Pentagon’s budget to $738 billion – $22 billion short of the President’s request, but above House Democrats’ initial proposal; (4) increasing non-defense discretionary spending to $632 billion – a $27 billion increase and victory for House Democrats that will cover extra costs to conduct the 2020 Census and provide additional funding to avoid a Veterans Administration (VA) shortfall; and (5) including $77 billion in offsets to pay for the increased spending – roughly half of the original $150 billion in offsets proposed by the White House. The offsets in the legislation include extending Customs fees that are set to expire and extending the Medicare sequester through 2029.

The House and Senate still need to pass their appropriations bills before September 30, 2019 to avoid another government shutdown. However, this budget deal sets the topline numbers for funding that Congress can then later allocate for programs and is positive first step.

Questions? Please contact Molly Fishman, CLSA’s Director of Federal Government Relations (mfishman@califesciences.org).