2-6-18 7:51 PM EST | Email Article
By Kristina Peterson and Siobhan Hughes 

WASHINGTON -- Congressional leaders were on the cusp of striking a two-year budget deal Tuesday to boost federal spending levels for both the military and domestic programs, after separating for now a stalled immigration fight from efforts to keep the government funded.

The emerging agreement is expected to increase military spending by $80 billion a year and nondefense spending by $63 billion a year, according to lawmakers and congressional aides, though the numbers were still being finalized.

A final agreement is expected to include funding for community health centers for two years, as well as relief for states and territories rebuilding after last year's destructive storms, and possibly an increase in the government's borrowing limit.

With the federal government's current funding set to expire at 12:01 a.m. Friday, both Senate Majority Leader Mitch McConnell (R., Ky.) and Minority Leader Chuck Schumer (D., N.Y.) said Tuesday they were very close to finalizing the long-sought budget agreement.

"I'm optimistic that very soon we'll be able to reach an agreement," Mr. McConnell told reporters.

Mr. Schumer said that while some issues were still being worked out, he and Mr. McConnell were "making real progress on a spending bill that would increase the caps for both the military and middle-class priorities on the domestic side."

A budget breakthrough this week would mark the separation of two issues that recently became linked together: government funding and immigration.

Lawmakers and congressional aides said last month's three-day partial government shutdown had helped Democrats realize the limits of their leverage on spending bills as they try to extract wins in the immigration debate.

Many Democrats said Tuesday they were ready to advance a two-year budget deal that would allow lawmakers to write and pass a long-term spending bill, which they had initially hoped to pass in December. Instead, the interlocking fight over immigration tied up the negotiations, forcing lawmakers to pass a series of short-term spending measures.

The coalescing budget deal was a disappointment to immigration advocates, but a relief to Democrats hoping to win back control of both chambers in this fall's midterm elections.

"I don't think we need to be shutting down the government. I do think we need a budget deal," said Rep. Tim Ryan (D., Ohio).

House Republicans said Democrats had won little from last month's government shutdown and learned a lesson from it.

"They bit off more than they can chew," said House GOP chief deputy whip Rep. Patrick McHenry (R., N.C.). "You don't win a shutdown."

Democrats had tried to use the spending fight to secure legal protections for the undocumented immigrants dubbed Dreamers, who were brought to the country at a young age. President Donald Trump in September ended the Deferred Action for Childhood Arrivals, or DACA, program that shielded them from deportation, but gave Congress until March 5 to pass its replacement.

Lawmakers have been struggling to reach an agreement protecting the Dreamers, but have been unable to unite on other immigration policy changes demanded by Mr. Trump. On Tuesday, Mr. Trump said he would be willing to shut down the government if Democrats didn't agree to tighten security along the border with Mexico.

But his comments came on the very day that Democrats publicly acknowledged they were willing to separate the two issues. Senate Democrats said they were now content to deal with them separately because Mr. McConnell, as part of the deal to reopen the government last month, promised to bring an immigration bill to the Senate floor, likely next week.

"What we agreed to do is go on a dual track" for spending and immigration, said Sen. Jeanne Shaheen (D., N.H.). "There was a separate commitment around DACA."

The shift, however, alarmed some House Democrats who are worried the immigration issue now won't get resolved, especially as more lawmakers discuss simply extending the Dreamer protections for one year.

"I'm concerned that the Senate will punt this issue," said Rep. Raul Grijalva (D., Ariz.).

If congressional leaders agree to the two-year budget deal, it would likely be the first spending agreement to boost federal funding above two sets of limits established in the Budget Control Act. In an effort to rein in federal spending, lawmakers in 2011 agreed to impose spending caps and tasked a group called the supercommittee to find additional cuts. When that group failed to reach an agreement, a second, more stringent set of cuts briefly went into effect in 2013, known as the sequester.

Since then, Congress has passed two separate two-year deals preventing the sequester cuts from kicking in, but have kept federal spending below the more generous Budget Control Act caps. But the emerging budget deal, which would lift spending by roughly $143 billion each year, would bust both sets of caps.

Under current law, military spending is capped at $549 billion for fiscal 2018, while domestic spending is capped at $516 billion. The budget agreement would boost military spending to $629 billion, which is above the $603 billion Mr. Trump had sought in his budget proposal to Congress last year.

Democrats had pushed to secure a budget agreement that lifted defense and nondefense spending by the same amount. The emerging agreement would reverse the sequester cuts for both categories -- providing a $54 billion boost for military spending and $37 billion lift for nondefense -- plus an additional $26 billion on top for each.

The House later Tuesday passed a bill that would fund the Defense Department through September, but keep the rest of the government running only through March 23. That bill stands little chance of passing the Senate, where Democrats are opposed to funding just the military for the full year. One possibility is that the Senate strips the defense funding out and adds the two-year budget deal to the package.

The budget deal would set the overall spending levels, but lawmakers will need several weeks to translate that into detailed spending legislation. Congress will still need to pass a short-term spending bill this week to provide them time to do that.

Mr. McConnell hasn't yet said what immigration bill he would bring to the Senate floor, and Democrats said that could affect the final stages of the budget negotiations.

"I'm optimistic that we're going to get a deal," Sen. Claire McCaskill (D., Mo.) said Tuesday. "The only thing that could screw this up is if Mitch McConnell made a commitment to a number of Republicans and Democrats that the base bill on immigration would be neutral and we have to make sure that that is neutral before there's a final signoff on anything. Hopefully that will get worked out also in the next few days."

--Nick Timiraos and Laura Meckler contributed to this article.

Write to Kristina Peterson at kristina.peterson@wsj.com and Siobhan Hughes at siobhan.hughes@wsj.com


(END) Dow Jones Newswires

February 06, 2018 19:51 ET (00:51 GMT)

Copyright (c) 2018 Dow Jones & Company, Inc.
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