Should the Debt Limit Be Suspended Through Mid-2021 & Budget Caps Lifted for Defense & Domestic Spending? (H.R. 3877)

What is H.R. 3877?

(Updated January 5, 2021)

This bill was enacted on August 2, 2019

This bill — the Bipartisan Budget Act of 2019 — would raise the debt limit through July 31, 2021, to avoid a potential default in late August or early September and raise discretionary spending caps to $1.371 trillion in FY2020 & $1.375 trillion in FY2021 (up from their FY2019 level of $1.321 trillion). It would increase discretionary budgets for both defense and non-defense categories, provide additional funding for the 2020 Census, and include $77.5 billion in offsets for the increased spending. A detailed breakdown of its various provisions can be found below.

SPENDING CAPS

Fiscal Year 2020: The overall discretionary budget would total $1.371 trillion. The defense discretionary budget would total $739 billion, including a base budget of $666.5 billion plus $71.5 billion for Overseas Contingency Operations (OCO), which is an increase of $30.9 billion from FY2019. The non-defense discretionary budget would total $629.5 billion, including $8 billion in OCO funding, which is an increase of $24.5 billion from FY2019. This section would also authorize a budget increase of $2.5 billion for the 2020 Census.

Fiscal Year 2021: The overall discretionary budget would total $1.375 trillion. The defense discretionary budget would total $740.5 billion, including a base budget of $671.5 billion and $69 billion in OCO funding. The non-defense discretionary budget would total $634.5 billion, including $8 billion in OCO funding.

Taken together, the budget levels set forth for FY2020-2021 would carry the federal government through the expiration of the budget sequestration enacted in the Budget Control Act of 2011, which would trigger across-the-board spending cuts if allowed to take effect.

DEBT LIMIT

This section would suspend the public debt limit through July 31, 2021, effectively allowing the federal government to continue borrowing money through bond markets.

OFFSETS

This section would offset spending by extending existing customs user fee rates from FY2027 through FY2029, and extending Medicare benefits provisions through that period as well. In total, it's projected they would reduce budget authority by $77.3 billion and outlays (actual spending) by $54.5 billion.

Argument in favor

Setting budget levels and making sure the federal government honors its obligations by raising the debt limit is one of the most important responsibilities that falls to Congress. As a bipartisan compromise, there are good and bad elements to this bill but the alternative — no deal and a potential default in late August or early September while Congress is on recess — is unacceptable.

Argument opposed

With a $22 trillion national debt the U.S. needs to do more to rein in spending, and this bill continues the unsustainable trend of kicking the can down the road for future generations. Alternatively, this bill’s priorities in terms of increasing spending on both defense and non-defense domestic programs are misplaced. Congress should work through August to reach a better deal.

Impact

The federal government; and financial markets.

Cost of H.R. 3877

The CBO estimates that enacting this bill would increase budget authority by $324 billion over the 2019-2029 period and increase spending by $319.4 billion over that period.

Additional Info

In-Depth: House Buget Committee Chairman John Yarmuth (D-KY) offered the following statement on this bipartisan budget caps and debt limit deal he introduced with Ways & Means Chairman Richard Neal (D-MA):

“I am pleased that a bipartisan, two-year budget caps deal has been reached in principle between Congress and the Administration. The agreement rejects the devastating Trump budget cuts in favor of strong investments in our national and economic security. This deal protects American families, provides certainty for our communities and our economy, and should be enacted without delay.”

President Donald Trump announced the deal by Tweet:

“I am pleased to announce that a deal has been struck with Senate Majority Leader Mitch McConnell, Senate Minority Leader Chuck Schumer, Speaker of the House Nancy Pelosi, and House Minority Leader Kevin McCarthy - on a two-year Budget and Debt Ceiling, with no poison pills… This was a real compromise in order to give another big victory to our Great Military and Vets!”

The fiscally conservative House Freedom Caucus tweeted its formal opposition to the deal:

“Our country is rapidly approaching $23 trillion in debt. We should be negotiating a responsible budget that serves taxpayers better — not raising spending by $323 billion with no serious offsets.”

Of Note: The structure of this bill is similar to what Congress passed in its last bipartisan budget & debt limit deal, the Bipartisan Budget Act of 2018, which came about after a 69-hour partial government shutdown to reach the deal and a more than five hour partial shutdown to enact the deal. That bill raised budget caps on both defense and non-defense discretionary spending and also raised the debt limit for two years.

Media:

• House Budget Committee Democrats Press Release

• House Rules Committee

• Bill Text

• CBO Cost Estimate

• Countable