Washington nears US budget deal to avoid new government shutdown

 

US politicians are closing in on a deal to ease the impact of spending cuts worth up to $200 billion (£122 billion) which are due to hit home next year, it emerged today.

Under the terms of the deal which ended October’s damaging government shutdown — during which 800,000 federal workers were sent home for 16 days — a 29-member budget conference panel was set up between Democrats and Republicans to agree on a modest easing of the automatic “sequestration” cuts due to kick in early next year.

The panel has until December 13 — this Friday — to agree a deal before the Christmas break, although the key deadline is January 15, when a temporary government spending extension agreed in October expires. If this is breached it raises the threat of a second government shutdown in four months.

But reports suggest that chief Republican negotiator Paul Ryan and Democratic Senator Patty Murray are “really close to a deal” which would avoid the talks going down to the wire and creating more damaging market uncertainty over the world’s biggest economy.

Crucial to the deal, however, will be steering it through Congress, where hardline Republicans refused to compromise over the budget in October before they were forced to back down amid mounting public anger over the shutdown.

ING Bank economist Rob Carnell said: “We may get to a deal but whether it has the votes to get through Congress is another kettle of fish altogether.”

If Ryan and Murray fail to reach a deal, Republican House of Representatives speaker John Boehner is poised to step in to avert the threat of another politically damaging shutdown in January and will go ahead this week with a stopgap spending plan that keeps funding at current levels. This would include all of the cuts currently pencilled in under next year’s sequestration process.

On notice: a second shutdown in January would compound the damage

‘Whether it has the votes to get through Congress is another kettle of fish altogether’

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