Donald Trump agrees deal with Democrats to raise US debt ceiling – until December

 
Jasper Jolly
US-POLITICS-TRUMP
Trump's White House is keen to move onto tax reform (Source: Getty)

Donald Trump has agreed a deal with opposition Democrats to raise the US debt ceiling, a limit on government spending, until mid-December, averting a shutdown in the federal government at the end of this month.

The deal will also fund $7.85bn (£6bn) in relief for victims of the damage caused by Hurricane Harvey last week.

The quick agreement surprised markets and dismayed some in the President's own Republican party, many of whom had expected they would push the next debt ceiling negotiation beyond mid-term elections in November next year.

The deal was offered by Chuck Schumer and Nancy Pelosi, the lead Democrats in the Senate and the House of Representatives.

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Ben Sasse, the Republican US senator for Nebraska, said: "The Pelosi-Schumer-Trump deal is bad."

Gregory Daco, chief US economist at Oxford Economics, said: "We don't yet know what Trump expects from Democrats in return, but this appears to be a calculated move to generate support his tax reform proposals, and clear the way for Congress to exclusively focus on that part of their agenda."

However, any strategic advantage for Trump could be undone if he pushes for funding of a border wall to be included in the deal, Daco added. The Democrats have been implacable in their opposition to the wall.

Trump signalled his focus on tax reform after agreeing the deal, tweeting that he wanted "tax reform that is pro-growth", although making no mention of the debt ceiling.

The eagerness to push on with tax reform – likely in the form of massive cuts in tax for businesses and the wealthy – has been prompted by a growing feeling of stagnation in the administration. The White House has failed three times to push through a signature health care plan, with his own party's senators rebelling.

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