4 Defense Stocks To Gain From The Bipartisan Budget Deal

On Jul 22, President Trump and leaders of the U.S. Congress announced that they have reached a crucial agreement on the federal budget and debt ceiling. The agreement is being viewed as an unexpected win for the pragmatists on Capitol Hill. For some time now, they have worked to prevent a government shutdown or the first federal default.

Trump was quick to hail the deal as a victory, especially for the armed forces. And in many ways, it is, though not as much as congressional Republicans would have wanted. Be that as it may, the agreement guarantees a significant increase in defense funding next fiscal. This is why it makes sense to stock up on defense stocks now.

Hard Bargaining Leads to “Near-Final” Deal

Weeks of tense negotiations have led to an agreement, which fails to meet the expectations of all parties involved. At the same time, it addresses key concerns, which is why Republicans are likely to claim a victory. In effect, the bipartisan deal suspends the U.S. debt ceiling and raises expenditure limits for the next two years.

The House of Representatives must approve the deal this week itself since a six-week recess commences from Jul 26. However, the Senate can vote on the agreement to vote as late as next week. In a statement on Monday night, the White House urged both houses of Congress to “quickly move this deal to the president’s desk for signature.”

Trump seemed thrilled with the deal stating that no “poison pills” would be forced into follow-up legislation. “This was a real compromise in order to give another big victory to our Great Military and Vets!” he tweeted. The deal broadly agrees to approve $1.37 trillion in agency spending in 2020 with a modest increase the following year.

Defense Spending Receives Major Boost

As a result of the deal, the Defense Department is likely to receive a major increase in funding in the next fiscal year. Since the agreement does away with the last two years of budget caps, also known as sequestration, military expenditure is set to clock in at $738 billion in fiscal 2020. This represents a year-over-year increase of 3%.

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