Sunday 17 June 2018

Trump approves $300bn funding deal to end brief US government's shutdown

Republican Senator Paul Rand was unhappy and delayed passage of the deal. Photo: AP
Republican Senator Paul Rand was unhappy and delayed passage of the deal. Photo: AP

Rachael Alexander

A brief US government shutdown ended yesterday after Congress passed, and President Donald Trump signed into law, a wide-ranging deal that is expected to push budget deficits into the $1tn-a-year zone.

The bill was approved by a wide margin in the Senate and it survived a rebellion of 67 conservative Republicans in the House of Representatives, thanks to the support of some Democrats. Those conservatives were mainly angry about non-military spending increases.

Mr Trump's signature brought an end to a partial government shutdown - or closure of federal agencies - that had been triggered in the early hours of yesterday as Congress was still debating the budget deal.

It was the second shutdown this year under the Republican-controlled Congress and Mr Trump, who played little role in attempts by party leaders this week to end months of fiscal squabbling.

In a Twitter post that acknowledged the misgivings of fiscal conservatives, the president said after signing the measure: "Without more Republicans in Congress, we were forced to increase spending on things we do not like or want in order to finally, after many years of depletion, take care of our military."

Mr Trump also wrote that negotiations will "start now" on an immigration measure that he and Democrats have been battling over for months.

The deal, the fifth temporary government funding measure for the fiscal year that began on October 1, replenishes federal coffers until March 23, giving lawmakers more time to write a full-year budget.

It also extends the US government's borrowing authority until March 2019, sparing Washington politicians difficult votes on debt and deficits until after mid-term congressional elections in November.

The Republican Party was once known for fiscal conservatism, but congressional Republicans and Mr Trump are now quickly expanding the US budget deficit and its $20tn national debt. Their sweeping tax overhaul bill approved in December will add an estimated $1.5tn to the national debt over 10 years.

Nearly $300bn (€245bn) in new spending will mean the annual budget deficit will exceed $1tn in 2019, said the Committee for a Responsible Federal Budget, a private fiscal policy watchdog group.

Yesterday's budget deal allows for $165bn in additional defence spending over two years, which will help Mr Trump deliver on his promise to boost the military.

That won over many Republicans, but some were furious over the $131bn extra made available for non-military spending, including health and infrastructure.

None of the added spending will be offset by budget savings elsewhere or revenue increases, relying instead on government borrowing.

There also is no offset reduction for nearly $90bn in new disaster aid for US states and territories ravaged by hurricanes or wildfires last year.

The US Office of Personnel Management sent a notice to millions of federal employees yesterday morning after Mr Trump signed the measure, telling them to report to work.

The brief shutdown in Washington came at a sensitive time for financial markets, with world stock markets diving in the past week.

US stocks plunged on Thursday on heavy volume, throwing off course a nearly nine-year bull run.

US stocks opened sharply higher early yesterday morning, even as several indexes remained on course for a steep weekly loss.

Markets barely flinched at the last shutdown in January, but that was before a sell-off that started on January 30 amid concerns about inflation and higher interest rates.

Republican Senator Rand Paul, objecting to deficit spending in the bill, engaged in a nine-hour, on-again, off-again protest and floor speech late on Thursday that delayed the passage of the deal past the midnight hour, when funding for the government officially ran out. Mr Paul had harsh words for his own party.

"Now we have Republicans hand in hand with Democrats offering us trillion-dollar deficits," he said.

"I can't ... in good faith, just look the other way because my party is now complicit in the deficits. Really, who is to blame? Both parties."

His dissent forced the brief government shutdown.

"Republican majorities in the House and Senate have turned the process into an embarrassing spectacle, running from one crisis directly into the next," Democratic Representative Nita Lowey said.

Republican Representative Kristi Noem said she voted against the bill because it raises non-defence spending and extends the federal borrowing authority.

"To increase domestic spending and raise the debt ceiling was coupling two very bad policy decisions and with no reforms tied to it. It was disappointing," she added.

House Democratic leader Nancy Pelosi and others in her party had opposed the bill because Republican House leaders would not guarantee her a debate later on bipartisan steps to protect about 700,000 "Dreamer" immigrants from deportation.

These young adults were brought illegally to the country as children years ago, mostly from Mexico.

Mr Trump said in September that he would end by March 5 former Democratic president Barack Obama's Deferred Action for Childhood Arrivals (DACA) programme, that protects the Dreamers from deportation.

Irish Independent

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