With big spending bill, Congress signals era of austerity in Washington is over

REUTERS/Joshua Roberts
House Speaker Paul Ryan, left, listening to House Majority Leader Kevin McCarthy during a news conference ahead of a vote on a short-term budget measure that would avert a government shutdown.

For most of the past seven years, Washington politicians — particularly Republicans — have talked a big game about fiscal responsibility, trumpeting budget belt-tightening and spending restraint in an era of deep bipartisan concern over big federal deficits.

But Donald Trump’s Washington is ready — really ready — to move on from this era of fiscal hawkishness: early Friday, Democrats and Republicans in Congress passed a budget deal that would blow away existing caps on defense and nondefense spending by the federal government, to the tune of nearly $300 billion over two years.

The legislation is a decisive rebuke to the regime of automatic spending cuts, known as sequestration, which took effect in 2013 and was intended to reduce federal deficits by over $1 trillion over 10 years. For the Republicans in control of government, it’s a remarkable departure from a decade of running on a politics of hard-line fiscal conservatism.  

Trump and his GOP allies in Congress were eager to jack up spending on the military, but that would have been hard to pass into law without enticing Democrats by offering a roughly commensurate increase in spending on non-defense programs.

Congress has approved sequestration-relief in the past, but lawmakers had insisted previously on accounting for increased spending with budget cuts and/or increased revenue elsewhere. There’s been little discussion of “off-setting” spending increases this time around.

The spending deal also comes on the heels of the Republicans’ sweeping cuts to taxes, which are projected to add as much as $1.5 trillion to federal red ink over a decade. Though there are notable holdouts, including a few in the Minnesota delegation, Congress appears to be enthusiastically embracing a new era of heavy spending on the military and social programs, and worrying about picking up the check later.

A ‘huge’ change from the way things used to be

After the spending deal was unveiled by GOP and Democratic leaders in the U.S. Senate on Wednesday, most Republican lawmakers, and quite a few Democrats, quickly got on board.

By early Friday morning, the Senate overwhelmingly approved the legislation, 71 to 28, and the House of Representatives followed suit, voting 240 to 186 to send it to Trump’s desk. In the Senate, DFL Sens. Amy Klobuchar and Tina Smith voted yes. In the House, DFL Reps. Betty McCollum and Rick Nolan voted in favor of the budget deal, with Rep. Erik Paulsen the only Republican to join then in the yes column. GOP Reps. Jason Lewis and Tom Emmer, and DFL Reps. Keith Ellison, Collin Peterson, and Tim Walz voted no.

Though there was some uncertainty on the House side, ultimately, the only real drama was provided by Kentucky Sen. Rand Paul, whose indignation that the GOP would pass such a massive spending bill led him to take procedural measures to delay the vote. Technically, the government was shut down for a period of several hours, as funding ran out at 12:01 AM on Friday.

The legislation, dubbed the Bipartisan Budget Act of 2018, represents the biggest increase in federal spending in nearly a decade. The bill would increase military spending by $80 billion for fiscal year 2018, and increase spending for all non-defense programs by $63 billion, accounting for a $143 billion budget bump in total. For fiscal year 2019, both sides would be increased by a total of $150 billion. (Under previous law, the defense budget was capped at $551 billion and nondefense discretionary spending at $516 billion for fiscal year 2018.)

Attached to the agreement on caps are other important items desired by both sides: an extension of the federal government’s borrowing authority, also known as the “debt ceiling,” to March 2019, and additional appropriations for aiding victims of last year’s natural disasters, funding programs to counter the opioid crisis, and funding four more years of the federal Children’s Health Insurance Program. (The increases included in the bill, for a two-year period, total closer to $500 billion, with everything added in.)

The budget discussion has dominated Washington recently because lawmakers were required to set top-line spending levels before they could complete the appropriations process that determines how much money specific departments and programs receive. For the current fiscal year, which is more than a third complete, Congress has passed five so-called “continuing resolutions,” which simply extend the levels of government funding set out previously.

The last big budget agreement was brokered by former President Barack Obama and John Boehner, then the outgoing Speaker of the House, and it expired at the end of last year, putting further pressure on lawmakers to lay out an updated fiscal vision.

The 2015 Obama-Boehner agreement, and a 2013 agreement before it negotiated by GOP Rep. Paul Ryan and Democratic Sen. Patty Murray, both eased the impacts of sequestration, but to far more modest extents than does this week’s deal. The 2015 budget agreement approved a one-year increase of $50 billion in spending, divided equally between defense and non-defense programs, and its predecessor from 2013 approved a $45 billion increase.

The deal this week blows those totals out of the water, and it does so without the prospect of political pain that overshadowed the 2013 and 2015 agreements, which fiscal conservatives in the GOP howled over and derided as massively irresponsible. Boehner had more latitude to negotiate the 2015 agreement because he’d already announced his retirement as Speaker, and didn’t need to worry about losing his gavel over brokering a deal to raise spending.

The new package brings Capitol Hill’s recent budgeting-by-crisis to an end, and raises the federal budget to its highest level since lawmakers appropriated trillions for bank bailouts and economic stimulus following the financial crisis of the late 2000s.

Notably, this time around, congressional leaders have not included, or even really pushed for, significant spending cuts to counter the impact of spending increases on the deficit. Some old ploys are being used to help pay for some of the package — oil sales from the Strategic Petroleum Reserve will provide $350 million in new revenue — but the price tag of the budget deal is largely not paid for elsewhere.

According to Mark Harkins, a former congressional chief of staff and an expert on congressional budgeting at Georgetown University’s Government Affairs Institute, this represents a significant departure from the way Congress has approached the issue over the last seven years.

“This is the first time that Congress is talking about breaching the cap levels and not paying for them,” he told MinnPost. “That’s huge. That’s a totally different point of view than we’ve had in congressional considerations of the budget over the last decade. They’re not small amounts. We’re not talking $30 to $40 billion — we’re talking $150 billion.”

What changed?

It was not long ago that self-proclaimed budget hawks like Ryan pointed to alarmist charts at press conferences to decry the rising tide of federal red ink, and even Democratic leaders like Obama insisted on spending deals with deficit concerns in mind.

In 2011, congressional Republicans risked a catastrophic default on the U.S. debt by refusing to raise the debt ceiling without significant cuts in federal spending. They coalesced behind a plan called Cut, Cap, and Balance — cutting current spending, capping future spending, and instituting legislation to require balanced budgets. That ultimately did not become law, but it was considered the mainstream GOP’s litmus test on fiscal issues.

Far from cutting, capping, or balancing, the legislation GOP leadership is enthusiastically plugging is projected to lead to a $1.2 trillion deficit in 2019.

Behind this remarkable shift are a few things that have increased Washington’s appetite for spending and decreased pressure for Republicans to act, or appear to act, in a deficit-minded way.

First and foremost, nearly everyone agrees that many D.C. policymakers on both sides are just tired of the austerity put into place by sequestration. Those automatic cuts to military and discretionary spending were meant to be so unappealing and politically toxic that they would force Republicans and Democrats to compromise on a grand budget agreement during negotiations in 2011. (Spoiler: they didn’t.)

The cuts have worked as intended — annual federal deficits are trending down, even if most hated the mandatory caps. But the relative spending drought has left lawmakers yearning to replenish their favored programs.

For the GOP, enthusiasm has largely been on the military side of the budget. Republicans in Congress — many of whom are staunch supporters of the military and represent districts that benefit greatly from Pentagon activity — have been pushing to increase military spending for years.

Military advocates got serious momentum in Trump, who ran on a platform of significantly beefing up military spending. In his first budget request to Congress last spring, Trump asked for a $603 billion budget for the Department of Defense; under this deal, Pentagon spending would be set at $700 billion for fiscal year 2018.

But in Trump, Republicans also got control of the White House and Congress — giving them, for the first time in over a decade, a chance to align spending priorities as they see fit.

Most Republicans would have liked to simply increase defense spending alone without accompanying it with increases in non-defense spending, but their relatively slim majorities in both chambers mean they need to accept a ramping-up of discretionary spending to ensure a defense boost — a trade-off most Republicans are willing to make. (The deal sets a cap for non-defense spending at $591 billion for FY 2018.)

In a press release, Paulsen touted the budget as a bipartisan win, though he has cut a profile as a fiscal conservative who warned in 2010 about “runaway spending and record debt” in response to the Obama stimulus package. “Minnesotans expect their elected representatives to govern and lead,” he said. “‘Compromise’ is not a dirty word and we should realize what can be achieved by finding areas of common ground.”

‘Typical Washington’

But the bipartisan deal has plenty of critics on both sides of the aisle. Lewis, a vocal fiscal hawk and a member of the House Budget Committee, panned the legislation, and said it was proof the D.C. establishment is winning.

“This is not a step in the right direction on the deficit and debt,” the 2nd District Republican said. “I can’t in good conscience support it… this ‘deal’ is something that is typical Washington.”

“I thought there’s nothing wrong with sequestration. If we’re not going to do our job, there’s nothing wrong with, ‘if you’re not going to get your act together, this is what’s going to happen,’” Lewis said. “The default position is, how about if I fund your program and you fund my program,” he continued.

Lewis’ Republican colleagues, Harkins says, have been tempted by the power of setting the agenda and deciding who gets the money — and how much of it.

“When they have this in their pocket, they don’t want to cut things, they want to direct things… it was a whole lot easier for Republicans to say they were for cutting the government when they didn’t control the White House and didn’t control the government.”

The sidelining of deficit-minded rhetoric from the GOP mainstream was also evidenced in the party’s enthusiastic support of a tax plan, passed last December, that could add $1.5 trillion to the deficit over a decade. Proponents insisted that its cost would be offset with increased revenue created by a stronger economy, but many economists dispute that claim.

According to David Reich, a senior fellow at the Center for Budget and Policy Priorities, a center-left D.C. think tank, deficit politics are no longer convenient for the GOP.

“They have certainly found that the deficit concern conflicts with things they want to do,” he told MinnPost. “It certainly conflicts with their desire for a very large tax cut package, particularly on the corporate side. On the appropriated side, there’s certainly strong support on the Republican side of the aisle for big increases in defense. That runs right into their traditional position of deficit reduction.”

“They’d say, well, of course, they should be offset in theory. That’s not necessarily happening,” Reich explains. “The drive for offsets certainly seems to be diminished.”

On the Democratic side, 119 House representatives voted no, largely because there was no discussion of a fix for young undocumented immigrants, known as the Dreamers, in the legislation.

Ellison — who told MinnPost on Thursday night “no DACA, no deal” — voted no. The 5th District Democrat also sounded incredulous that the GOP would approve such a spending increase: “They just passed a tax bill that cost an enormous amount of money, and now they’re going to do this big spending bill with all this defense money?”

Time for dessert

The passage of the budget sparks a bonanza for congressional appropriators, who can now outlay funds for the rest of the fiscal year for specific programs.

Military appropriators are relieved: they argue the deal allows the Pentagon to finally make long-term spending plans that boost the armed forces’ capability and readiness.

Democratic proponents of the deal are savoring the chance to appropriate more money to the federal programs they hold dear, and also touted the additional spending provisions on the bill, including $7 billion for community health centers, $4 billion for Veterans’ Administration hospitals, and $2 billion for research at the National Institutes of Health.

There will be a greater price for D.C. to pay for this deal, lawmakers like Lewis say — if not now, then later. “There’s got to be something going forward to get a handle on this before we have a sovereign debt crisis, for crying out loud,” Lewis says. “We can’t keep spending like this without real dislocations in the economy.”

Harkins forecasts that this run of spending may set up another round of unpopular austerity in the future, if the combination of increased expenditures and a greater-than-expected impact on the deficit from the tax plan bring red ink back up to late-2000s levels.

Ultimately, that’s a concern for another time. “Members of Congress are tired of eating vegetables,” Harkins said, “and they’re ready to have some dessert. And the president seems to like two scoops.”

Comments (16)

  1. Submitted by Frank Phelan on 02/09/2018 - 11:23 am.

    Yawn

    No, there has not been a big change here. When the GOP is out of the White House, they yammer on endlessly about the debt, the debt, the debt. When they win a majority of votes in a Presidential election, I mean.. win the White House, it’s a fast 180.

    This has been going on for 40 years. And it is lazy reporting and another example of false equivalence to suggest anything otherwise.

    Business as usual until adults are again in charge and clean up after the keg party.

  2. Submitted by joe smith on 02/09/2018 - 11:33 am.

    Fiscal responsibility and Washington DC

    should never be used in the same sentence. A shame that when Obama was running up our debt, to the tune of 20 Trillion, the Democrats were silent and now when Trump is running up our debt the GOP will find ways to defend it….. That is why DC is broken and term limits are needed. The hypocrisy on both sides is sickening. Add that to DC elites weponizing the IRS, DOJ, EPA, FBI and we have a banana republic starting up!

    • Submitted by richard owens on 02/10/2018 - 02:58 pm.

      Must this meme continue?

      Obama “Running up debt”? Mr. Smith, you must know the President is not an appropriator, nor can any spending bill be advanced from the Presidency.

      If you would recall, President Dubya and Cheney (famously “deficits don’t matter”) engaged in multiple wars, the funding for which was all done in “supplementals”. No budget was advanced to wage these wars at their cost, and we who were concerned were told the “oil would pay for it..”.

      Furthermore, when President Obama took office, his budgets were ignored, one after the other, while stubbornly crafted Continuing Resolutions funded the government for his entire terms. When attempts were made to reconcile the “debt limit”, Republicans shut down the government in order to avoid passing the necessary 12 funding bills specified to be done by the House of Representatives every fiscal year. It’s all in the public record.

      Those fights resulted in an offer by the President, that if no agreement could be reached,caps would be placed on spending. The Republicans basically said “fine” and allowed the caps to take effect, knowing the result would be crippling to departments and prohibit spending changes or fiscal planning.. It was all Obama’s fault.* (*They left his caps in place to take the heat.)

      Tell the truth. Obama’s deficits were Iraq and Afghan wars, equipment losses, many casualties of a newer and more horrible kind from so many head wounds and IED traumas.

      The Iraq and Afghan war costs are still left unpaid. But the debt service and the costs continued through all of Obama’s presidency.

      Please stop pretending that Obama was a poor President and admit he and the recovery were slow but just about perfect- growth steady jobs steady inflation near zero. The only stimulus Congress would allow was half the size recommended by economists, and 1/3 was more tax cuts to those who didn’t need a thing.

      We should thank Bernanke and Yellen, as they acted while Congress played OBSTRUCTION. Republicans cried “printing money” audit the fed” and basically did none of their own work.

      Please. Stop saying Obama ran up the debt. His legacy is not yours to smear.

      The man your party brought to the Presidency has not a hint of the character and humility and principles we enjoyed from the true family man Barack Obama.

      Your party represents all that is wrong today in politics.

      • Submitted by joe smith on 02/11/2018 - 01:15 pm.

        Please some reality.

        Obama had control of all or 2/3rds of the power in DC for 6 of his 8 years. His nearly 1 trillion dollars stimulus didn’t stimulate a thing (remember him laughing while stating shovel ready not so shovel ready). Obamacare cost 100’s of billions (was that a GOP bill.?). It cost the tax payers $24,000 dollars a car for “cash for clunkers) another solid program. Bottom line under Obama the public debt went up 86%…. Spinning that away with Dem talking points is just denial of facts!!

        • Submitted by richard owens on 02/11/2018 - 04:53 pm.

          More lies Joe?

          Obama was not allowed to “control” spending.

          The recovery.gov site showed how money in the stimulus saved many state budgets, extended unemployment and kept teachers and firefighters on the job.

          In every state you could go and look up how the monies were spent (albeit 1/2 of what economists said was needed.) Every county in America was listed. Yours too. REAL money for public projects to keep people working.

          That is history and it is a fact.

          You repeat FOX slogans and ridicule “shovel-ready” misinformation to discredit the former President, despite your knowing he did not receive Congressional support for just about anything.

          Did you think we were all sleeping? My memory recalls the Republican obstruction and a continuing effort by folks like you top re-write the legacy of our best President in my lifetime, given the worst of conditions by his predecessor and Republican hostility to his very legitimacy and birthright.

          What is at stake to make you try to change my memory of what happened?

          • Submitted by joe smith on 02/11/2018 - 08:02 pm.

            Fact, National debt went up

            86% under Obama. Fact, Obama had all or 2/3rds of power in DC for 6 years. Many programs under Obama spent Trillions of dollars that is how Obama’s administration added 10+Trillion to the debt in 8 years, fact. When Trump adds 10+Trillion dollars to the National debt, it will be his fault. It really isn’t that hard to assign blame to those who deserve it.

            • Submitted by richard owens on 02/12/2018 - 09:48 am.

              The National Debt continues to go up…

              Because the interest on the debt accrues! More war machines, ordnance, fuels and personnel accrue to a commitment to stay at war indefinitely. Treatment of casualties may continue for the lifetimes of those damaged. Accrual is actually a conservative principle you might do well to study.

              You should simply stop blaming President Obama for what was a huge mistake- the invasion and attempt to “fix” Iraq as mere vengeance for 911 (the perpetrators of which had nothing to do with Iraq), and a chance to seize more oil, ALL, without so much as a plan to get out.

              If you can’t see the accrual of unpaid, astronomical costs resulting in higher debt, I wonder what I could say to teach you.

              You may continue to blame Obama, but nothing you have asserted shows any truth in that.

              You apparently smear Obama for your own reasons, and feel free to debase his legacy.

              I think it is because you cannot accept the rot we are witnessing in the Republican party and the destruction it is causing our country.

  3. Submitted by Mike Downing on 02/09/2018 - 11:34 am.

    When was there “austerity”?

    When has there been austerity with increases of 7-10%? How many people receive this type of increase?

    “Austerity” is certainly not reducing a budget from a 10-13% increase to only an increase of 7-10% and this is certainly not a cut!

  4. Submitted by Tom Christensen on 02/09/2018 - 01:51 pm.

    Republicans talk a good story about their deficit principles

    They always fail when it comes to living up to their principles. Fiscal responsibility and Republican should never appear in the same sentence because they are antonyms. Remember conservative is a name they gave themselves, but it is meaningless. Rand Paul was right last night when he criticized his own party and their hypocrisy.

  5. Submitted by Dennis Wagner on 02/09/2018 - 05:29 pm.

    As

    FP said, what’s new, same old hypocracy. When Obama ran some numbers in 2009 etc, they were to avert a major economic meltdown, despite contradictory after the fact arm chair economic rhetoric. TC is pretty accurate as well “Fiscal responsibility and Republican should never appear in the same sentence because they are antonyms” We all know the last president to have a balanced budget was Billy Boy Clinton, And we all now we got the great deal maker that promised running the governemnt like a business, guess his plan is run DC like his business, into bankruptcy!

  6. Submitted by Steve & Gayle Fuller on 02/11/2018 - 06:24 am.

    The long game

    Suddenly deficits don’t matter, why? First it is to satisfy the Donor Class with a substantial tax cut that fills their bank accounts while spreading some crumbs around to placate the rabble. Second the increase in Defense spending makes Congress look good to the voters at home, as does the non-discretionary spending that makes Democrats look good. But whats the long game? Rep. Paul Ryan, a disciple of Ayn Rand, has a visceral hate of Social Security, Medicare & Medicaid. So is the long game one where suddenly he reverts back to a fiscal conservative attacking the social safety net as the only way back to a balanced budget? That the privatization of America is the only way forward? This has been the Republican goal for a long time and it is slowly happening, a little bit at a time. Watch out austerity will return with a vengeance.

    • Submitted by Frank Phelan on 02/11/2018 - 08:54 am.

      Oh Great

      You just gave the game away!

      But don’t worry, the tax scam will super charge the economy and the tax revenues will swamp the treasury. Hey, that’s what Ryan said.

  7. Submitted by Paul Udstrand on 02/14/2018 - 10:40 am.

    The end of an “era”?

    I don’t know why the US media have such a hard time with this… Republicans have been the Party of debt and deficit since Ronald Reagan got elected. Yes, they always talk about fiscal responsibility but the truth is… they always lie about it, or clearly they have no coherent concept of fiscal responsibility.

    In fact it’s clear from looking at Republican budgets over the last four decades that they actually prefer deficits and high debts because they keep creating them whenever they have a chance. Republicans prefer budget crises over budget stability because crises provides a rationale for attacking programs and services they don’t like or believe in. This has been an obvious and transparent feature of Republican politics for decades… You’d think the press would have noticed it by now.

    This is obvious, so the idea that Republicans just now “became” the Party of deficits and debt is simply facile. This deficit increase was predicted if for no other reason because they blew a trillion-plus hole in the budget with their tax cut. The fed already announced last week that they were doubling the amount of money they intended to borrow in order to finance the tax-cut, and that was BEFORE this budget deal was signed.

  8. Submitted by Dan Landherr on 02/14/2018 - 12:39 pm.

    Waste, fraud and abuse

    Somehow the same people who rail against those items constantly seem to ignore it when it comes to defense spending. Typical fiscal irresponsibility from the GOP.

    https://www.washingtonpost.com/investigations/pentagon-buries-evidence-of-125-billion-in-bureaucratic-waste/2016/12/05/e0668c76-9af6-11e6-a0ed-ab0774c1eaa5_story.html?utm_term=.11fa018720f4

    The Defense Department didn’t need any more money. They needed to clean up their act and use the money they already receive more wisely.

  9. Submitted by Paul Udstrand on 02/16/2018 - 08:12 am.

    I guess the best summary has always been “selective” austerity

    The only era of Austerity we’ve seen is one of selective austerity. Austerity for programs Republicans don’t like and increased spending for those the like. They idea that Republican budgets were ever about fiscal responsibility rather than social engineering has always been flat out dishonest. Democrats have simply failed to outline that agenda and run against it.

  10. Submitted by Karen Sandness on 02/16/2018 - 05:59 pm.

    Same old, same old

    I first noticed the Republican hypocrisy on this issue during the Reagan administration. Here Reagan was going on and on about “wasteful government spending” and using it as an excuse to cut social programs while at the same time proposing what was then the largest peacetime military budget in U.S. history.

    I never got around to creating the bumper sticker that I had in mind: Military spending IS government spending, something that Republicans seemed unable to grasp.

    Talk about poor education! It should have been elementary school arithmetic to figure out that increasing spending while cutting taxes would balloon the national debt.

    However, ever since the Reagan era, Republican ideology has consisted of the following points:

    1. Taxes are the worst thing that can happen to a human being, especially if that human being is fabulously wealthy. Billionaires are really hurting.

    2. However, if poor people are exempt from income taxes due to their low incomes, then they “don’t have skin in the game” and are “sucking at the government teat.” I have even seen online commentators say that people who don’t pay income tax shouldn’t be allowed to vote, since they will only vote for more generous government assistance for themselves. (Hmm, do I see a bit of projection here? And besides, that question was settled in the 1830s.) And if billionaires don’t have enough money, poor people have too much, since they get food stamps and Medicaid.

    3. All programs designed to help the vulnerable or improve America’s quality of life are “wasteful government spending.”

    4. All military spending is justified, even when there are cost overruns in the trillions of dollars and wars that make no sense. No reason. It just is.

    5. All laws that prevent businesses from selling dangerous goods or fraudulent services, underpaying or endangering their employees, polluting the environment, discriminating against employees or applicants on grounds that have nothing to do with job performance, or hiding their earnings are “big government interference in the free market.”

    6. However, the government has the right to manage people’s private lives. That is not “big government.” This is “standing up for family values.”

    7. Going through the motions and honoring symbols is of supreme importance. You MUST salute the flag and say the Pledge of Allegiance with the “under God” part in it. You must have school prayer and put the Ten Commandments up in your public courthouse. These are non-negotiable. However, if you actually strive for liberty and justice for all or if you point out that Christ did not favor the wealthy, you’re a Social Justice Warrior, which, for some reason, is a Bad Thing in right-wing ideology. (I guess they prefer Anti-Social Injustice Warriors, judging from some of the groups that have endorsed Republican candidates recently.)

    7. Most Evangelical Christians and conservative Catholics are allies of the Republicans when it comes to #6. However, if left-leaning Evangelicals (e.g. Sojourners magazine) or mainline Protestants (Lutherans, Episcopalians) or Catholics (Pope Francis) venture into condemning unjust economic systems, they are “influenced by Marx.”

    Maybe I’m exaggerating a little bit–but not by much. Sad to say, I have no great love for the Democrats, who were compromised by the influx of yuppie Democrats during that same period, but our system does not allow third parties, and the Republicans now are so awful that I can’t see myself voting for one any time soon.

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