Johnson strikes his first bipartisan deal — a $1.7T funding accord

Congressional leaders have clinched a deal on overall budget totals that could pave the way for a broader government funding compromise in the coming weeks — further enraging Speaker Mike Johnson’s right flank.

The long-stalled agreement, announced Sunday afternoon, establishes funding limits for the military and domestic programs for the fiscal year that began on Oct. 1, allowing House and Senate appropriators to begin hashing out their differences between a dozen annual spending bills. A partial government shutdown looms 12 days away.

Under the bipartisan agreement Johnson negotiated with Senate Majority Leader Chuck Schumer, defense funding is set at $886 billion for the current fiscal year, in line with the total President Joe Biden and former Speaker Kevin McCarthy struck as part of last summer’s debt ceiling package. The accord pegs non-defense funding at nearly $773 billion, a total that counts tens of billions of dollars agreed to alongside the debt limit package, the so-called “side deal” that conservatives tried to kill.

Non-defense budgets would remain roughly flat, amounting to a less than 1 percent decrease compared to current funding. Military programs would see about a 3 percent increase.

During a private briefing call, Schumer told Senate Democrats, “It’s a good deal for Democrats and the country.” Publicly, Biden said the accord moves leaders “one step closer” to thwarting “a needless shutdown.”

But the agreement is far higher than fiscal conservatives have demanded, raising the specter of a funding lapse and risking the House speaker’s good standing among his conference.

In a letter to House lawmakers on Sunday, Johnson celebrated $16 billion in extra spending cuts he negotiated beyond the terms of the debt agreement, for a total of $30 billion less than Senate lawmakers sought in the funding bills they have drafted.

The speaker acknowledged that the funding levels “will not satisfy everyone, and they do not cut as much spending as many of us would like.” But he called the deal “the most favorable budget agreement Republicans have achieved in over a decade,” noting that the bipartisan accord will allow GOP lawmakers to put their mark on federal budgets, rather than running the government on the “Schumer-Pelosi” deal struck before Republicans claimed the House majority last year.

Lawmakers will have to work incredibly fast — federal cash for the departments of Agriculture, Transportation, Energy, Veterans Affairs and more expires on Jan. 19. Funding for the rest of the government, including the biggest domestic programs and the Pentagon, runs out on Feb. 2. A shutdown remains very possible, with a host of thorny policy issues for congressional leaders to work through in extremely limited time, including conservative demands to attach GOP border reforms to spending legislation and Republican ultimatums holding up Biden’s separate request for more than $100 billion to aid Ukraine, Israel and Taiwan.

Johnson also forecast partisan clashes in the coming weeks on policy issues like funding for abortion, saying in his letter that the agreement gives GOP leaders “a path” to “fight for the important policy riders” included in the funding bills House Republicans have drafted.

In an effort to appease Republicans, both sides agreed to rescind more than $6 billion in unspent pandemic aid, plus more than $20 billion for IRS enforcement. The clawback of tax enforcement funding was already agreed to under the debt limit deal. But it’s being frontloaded to this year, rather than two tranches of $10 billion, and Republican leaders say they will seek to trim more during other funding negotiations.

Johnson was also successful at hacking away at the side agreement negotiated alongside the debt limit deal, by ensuring emergency funding stays at the current level of $12.5 billion, rather than $23 billion. Money to offset changes to mandatory programs will also stay steady, at $15 billion, instead of the $25 billion agreed to under the debt accord.

White House budget director Shalanda Young said GOP leaders have been “working in good faith to prevent a shutdown.” But she predicted Johnson is likely to face revolt within his conference, complicating endgame negotiations and increasing the odds of a funding lapse.

“So while I think leadership understands this is a bad path, the question is: Can they hold back the floodgates?” Young told reporters during an event hosted by the Christian Science Monitor on Friday.

"History has shown us that leadership can work in good faith, and then they go into a raucous conference room after a trip to the border,” said the OMB director, who previously served as the House’s top appropriations aide. “And then the sentiment of … 'We'll shut the government down. We control the money,' wins out the day.”

The deal on a government funding framework, a critical first step quietly negotiated by Schumer and Johnson’s staffs, comes after House conservatives spent the better part of last year trying to undo the budget totals established by last summer’s bipartisan debt ceiling accord.

Conservatives have fought for months to deeply slash spending beyond the bipartisan funding levels Biden and McCarthy negotiated, even ousting McCarthy from the speakership in part for cutting that deal with Democrats. Their efforts, however, have so far fallen short.

Indeed, the arrival of a new speaker has yielded a funding agreement that many Democrats would argue is actually a far better outcome for domestic programs than the cuts that could be triggered by last summer’s bipartisan debt law.

If Congress doesn’t override those triggers, a short-term funding patch would spur defense funding cuts of about 1 percent at the beginning of May, while non-defense accounts would be slashed by an estimated 5 percent. A 9 percent cut to domestic programs would be exacted if Congress fully funds the government without negating that sequester.

The fiscal conservatives who have pushed House Republican leaders all year to negotiate funding cuts to the non-military side of the budget are insistent that their new speaker use the sequestration threat as leverage to force other spending concessions from Democrats.