US Congress reaches bipartisan budget agreement to avoid partial shutdown next year

Barack Obama praises the deal as a 'good first step'

Congressional negotiators, in a rare show of bipartisanship, have reached a modest US budget agreement to restore about $63 billion in automatic spending cuts from programs ranging from parks to the Defense Department and eliminate the threat of another partial government shutdown early next year.

The spending increases would be offset by a variety of increased fees and other provisions elsewhere in the budget totaling about $85 billion over a decade, leaving enough for a largely symbolic cut of about $23 billion in the nation's debt, now $17 trillion and growing.

The White House quickly issued a statement from President Barack Obama praising the deal as a “good first step.” He urged lawmakers in both parties to follow up and “actually pass a budget based on this agreement so I can sign it into law and our economy can continue growing and creating jobs without more Washington headwinds.”

Bipartisan approval is expected in both houses of Congress in the next several days, despite grumbling from liberals over the omission of an extension of long-term unemployment benefits and even though hardcore conservative tea party-aligned groups have already begun pushing Republican lawmakers to oppose it.

The US federal budget year begins on 1 October. But Congress, snarled in political disagreements, could not agree to a budget plan at the time and the government was shut down. The fight centered on Republican attempts to block funding for President Barack Obama's overhaul to the American health care system. The country also came close to the first-ever federal default when Congress couldn't reach agreement on raising the debt ceiling. Republicans relented and agreed to a short-term deal to fund the federal government and raise the debt ceiling when it became clear that Americans were deeply angered over their tactics.

Announcement of the new deal came in the form of a statement from the two negotiators, Sen. Patty Murray, a Democrat, and Rep. Paul Ryan, a Republican. The lawmakers chair the budget committees in the Democratic-controlled Senate and the Republican-led House of Representatives, and negotiated the deal in secretive talks over recent weeks.

The deal “reduces the deficit by $23 billion and it does not raise taxes. It cuts spending in a smarter way” than the ones in effect, Ryan said. Murray said, “We have broken through the partisanship and gridlock” that could have produced a government shutdown in January.

The legislation that ended the 16-day partial government shutdown in October expires on 15 January, and the agreement between Murray and Ryan stipulates a new spending level for the remainder of the current budget year as well as the one that begins next 1 October.

Murray and Ryan had scarcely finished lauding their work when Republican Sen. Marco Rubio, a potential 2016 presidential contender, announced he would oppose it.

“We need a government with less debt and an economy with more good paying jobs, and this budget fails to accomplish both goals,” he said in a statement.

While Tuesday's agreement would have little impact on deficits, it holds the potential for avoiding politically charged budget clashes for the next year or two. It also was reached without the threat of an impending catastrophic deadline hanging over lawmakers' heads.

But the plan does nothing to address three of the big drivers of American deficit spending — the Medicare government health insurance program for the elderly, the Medicaid aid program for the poor and the Social Security government pension system.

Conservatives are upset that the plan rolls back automatic spending cuts, known as the sequester, while liberals are angered about the requirement that federal employees will have to pay more toward their pension accounts. Significantly for Democrats, they failed in their bid to include an extension of benefits for workers unemployed longer than 26 weeks. The program expires on 28 December, when payments will be cut off for an estimated 1.3 million individuals.

Officials said that under the agreement, an estimated $63 billion in automatic spending cuts would be restored through the end of the next budget year, which runs to 30 September, 2015.

The offsetting $85 billion in deficit cuts would play out over a decade. It calls for newly hired federal workers to make larger contributions to their own pensions, as well as an increase in a federal airport security fee that would add $5 to the cost of a typical roundtrip flight. The annual increase in military retirement benefits for those under age 62 would be slowed. More savings would come from extending an existing 2 percent cut in payments to providers who treat Medicare patients.

Full details were unavailable pending their posting on budget committee websites.

Conservative organizations attacked the proposal as a betrayal of a hard-won 2011 agreement that reduced government spending and is counted as among the main accomplishments of tea party-aligned Republicans who came to power earlier that year in the House pledging to slash government spending.

Americans for Prosperity issued a midmorning statement saying that Republican lawmakers should uphold current spending levels. Otherwise, the group said, “congressional Republicans are joining liberal Democrats in breaking their word to the American people to finally begin reining in government overspending that has left us over $17 trillion in debt.”

Given the internal Republican divisions in the House, its leader, Speaker John Boehner, is likely to need Democratic votes to approve any deal by Ryan and Murray. It was not immediately clear how many Democratic lawmakers would support a plan that lacked an extension of long-term unemployment benefits.

“While modest in scale, this agreement represents a positive step forward by replacing one-time spending cuts with permanent reforms to mandatory spending programs that will produce real, lasting savings,” Boehner said, indicating he would support bringing the deal to a vote on the House floor.

If left in place, the automatic reductions would carve $91 billion from the day-to-day budgets of the Pentagon and domestic agencies when compared with spending limits set by the hard-fought 2011 budget agreement.

Support for a deal to ease the reductions is strongest in Congress among defense hawks in both houses and representing both parties who fear the impact on military readiness from a looming $20 billion cut in Pentagon spending.

The White House wants a deal for a same reason, but also to ease the impact of automatic cuts on domestic programs from education to transportation to the national parks.

AP

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