Jul 25, 2019

House votes to suspend debt ceiling through 2021

Orion Rummler

Illustration: Aïda Amer/Axios

The House voted 284-149 on Thursday to pass a budget that suspends the debt ceiling through 2021 — allowing the government to borrow money for 2 more years — and raises spending caps by about $320 billion.

The big picture: The federal debt exceeded $22 trillion in February and the Congressional Budget Office projects it to reach "unprecedented levels" over the next 30 years if current laws go unchanged. The federal deficit has grown 23% this fiscal year. Thursday's deal passes the buck on the next federal debt showdown until after the 2020 elections.

  • The package includes a $22 billion increase in military spending for 2020 and a Democrat-supported $27 billion increase for non-defense spending. Those budgets will increase by $24.5 billion and $29.5 billion in 2021.
  • The deal also sets aside $2.5 billion to ensure everyone is counted in the 2020 Census, according to a senior Democratic aide.

The state of play: The deal still has to pass the Senate, but Trump's recent endorsement is expected to sway some Republicans. Mnuchin extended the debt issuance suspension period on Thursday to allow Congress to pass its deal on the debt ceiling.

The other side, via Axios chief financial correspondent Felix Salmon: "There is no evidence from 240 years of American history that the level of the national debt has ever really mattered."

  • "The U.S. prints its own currency and can borrow as much as it likes, increasingly from domestic investors. Per [Warren] Buffett, deficit hawks have preached doom for decades. They have never been proven correct."

Go deeper: The national debt has soared past $22 trillion, but it might not matter

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Senate passes $2.7 trillion budget deal

Illustration: Aïda Amer/Axios

The Senate voted 67-28 to pass a $2.7 trillion budget deal Thursday that would suspend the debt ceiling through 2021, sending the package to President Trump's desk after the House passed it last week.

Why it matters: The Congressional Budget Office projected that the national debt would reach "unprecedented levels" in the next 30 years should laws remain the same. It exceeded $22 trillion in February, and the federal deficit has grown 23% this fiscal year.

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U.S. budget deficit set to hit $1 trillion 2 years earlier than expected

Photo: Rarrarorro/Getty Images

A new report from the Congressional Budget Office shows that the U.S. budget deficit is expected to breach $1 trillion by 2020, two years earlier than previously projected.

The big picture: The growing deficit has been driven by President Trump's tax cuts, increased government spending and rising health care costs. The shortfall is expected to be widened by the recent budget deal reached by Trump and Congress to lift spending caps by $320 billion, as well as the emergency spending package that Congress passed to help manage the migrant crisis at the U.S.-Mexico border, the Washington Post reports.

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U.S. budget deficit blows past last year's total with 2 months to go

The U.S. budget deficit has already surpassed last year's total figure, growing to $866.8 billion in just the first 10 months of the fiscal year, according to Treasury Department data reported by Bloomberg.

By the numbers: The deficit is up 27% from the same period last fiscal year, which begins in October. Spending has continued to outpace revenue, with a 3% rise of revenue overshadowed by an 8% jump in spending. President Trump's tariffs have nearly doubled revenue from customs duties to $57 billion, but the modest increase has been dwarfed by increased spending on defense and health care, per CNBC.

Go deeperArrowAug 12, 2019