President Trump has struck a debt-ceiling deal with Democratic leaders in Congress.
The Constitution grants only Congress the power "to borrow Money on the credit of the United States." The typical process for this is that Congress grants the U.S. Treasury the freedom to borrow money up to a certain limit, known as the "debt ceiling."
The national debt keeps growing, and so Treasury keeps coming up on the debt ceiling, requiring action from Congress.
The deal this week doesn't actually raise the debt limit — it temporarily suspends it for three months, meaning Treasury can borrow as much as it needs until mid-December.
The other aspect of the Schumer-Trump deal is that Democrats will get hurricane relief funds without cost offsets elsewhere in the federal budget. Trump's White House budget director, Mick Mulvaney, told Fox News that the agreement shows Trump has "proved that he can govern. He proved that he can run the country and prioritize what's most important at the appropriate times."
Perhaps, perhaps not.
After all, many of Mulvaney's former colleagues in Congress aren't happy. These Republicans say Trump's deal upsets efforts to pass a longer term raise to the debt ceiling alongside cuts to federal discretionary spending. Absent those cuts, many conservatives say this spending package is "Washington as usual": just another shot in the arm of the deficit.
Yet, as Byron York explains, Trump's motivations are somewhat understandable when we consider his legislative ambitions.
By creating some space in the depleting Congressional calendar (before recesses for Columbus Day, Thanksgiving, and Christmas), Trump hopes he can get at least one major legislative victory before the year's end. Considering his health care reform debacle, Trump needs to get tax reform passed if he's to re-energize his administration. And if Trump does now get tax reform, especially to the corporate code, his Democrat-dealing will ultimately be viewed positively.
Still, the risks are significant. Democrats know that the president is increasingly frustrated with Republican leaders, House Speaker Paul Ryan and Senate Majority Leader Mitch McConnell. In turn, they know this agreement will inflame those tensions. As tax reform discussions advance, Democrats will use these tensions to expand frictions between the Ryan tax reform bloc (which prioritizes code simplification) and the Trump bloc (which prioritizes rate cuts). As I warned following the election, these disagreements are philosophical more than political, and could create a Republican civil war.
There's a final danger for Republicans here. When the debt ceiling extension runs out in December, Democrats will be optimistic of extracting further concessions from Trump. They will, for example, seek the formal approval of Obama's Deferred Action for Childhood Arrivals program and perhaps new money for Obamacare subsidies. But to avoid relying on Democratic votes, Trump will have to woo the same GOP conservatives that he has just now alienated!
In short, America's fiscal nightmare remains unresolved, and political chaos looms on the near horizon.