US reaches budget deal
A bipartisan budget deal announced in the US Congress, while modest in its spending cuts, would end nearly three years of partisan stand-offs between Democrats and Republicans that culminated in October with a partial government shutdown.
Democratic Senator Patty Murray and Republican Representative Paul Ryan appeared before reporters Tuesday (local time) to announce the US$85 billion (NZ$102 billion) budget accord, which still must be approved by the full Senate and House of Representatives.
"For far too long compromise has been considered a dirty word," Murray said, adding that the uncertainties created by three solid years of Washington bickering "was devastating to our economic recovery."
Ryan, the Republican Party's 2012 failed vice presidential candidate who has his eye on either a 2016 presidential campaign or potentially a House leadership job, wasted no time in trying to blunt criticisms of the pact, especially from fellow conservatives.
"In divided government, you don't always get what you want," Ryan declared.
But he added, "I think this agreement is a clear improvement on the status quo. This agreement makes sure that we don't have a government shutdown scenario in January. It makes sure we don't have another government shutdown scenario in October. It makes sure that we don't lurch from crisis to crisis."
It would blunt the effect of automatic "sequester" spending cuts by allowing federal agencies and discretionary programs to spend US$63 billion (NZ$75 billion) more over two years, while savings are made elsewhere. It also would provide an additional US$20 billion to US$23 billion (NZ$24 billion to $27 billion) in deficit reduction over 10 years.
The accord was uncharacteristic for a Congress that in the past has found little common ground and has waited until the absolute last moments to reach stop-gap agreements on the budget and on raising US borrowing limits to avert historic debt defaults.
Instead, Ryan and Murray came to a handshake before a non-binding Friday deadline and more than a month before the January 15 date when existing funds to run many federal programs expire.
The House is likely to put the deal to a vote by Friday, before recessing for the year, and a Senate vote might come next week.
House Speaker John Boehner, who was at the center of bitter budget fights with President Barack Obama in 2011, 2012 and 2013, said: "While modest in scale, this agreement represents a positive step forward" that he said would further cut budget deficits without tax hikes.
Obama called the deal "a good first step" and urged Congress to quickly pass it.
Among the details of the bill are US$6 billion (NZ$7 billion) in cuts to federal workers' retirement benefits and $6 billion in cuts to military pensions, according to Murray.
These and other new savings would replace some of the second round of automatic spending cuts, known as "sequestration," that were scheduled to begin in January.
Murray and other leading Democrats have been pushing for an extension of federal jobless benefits that expire later this month during weeks of budget negotiations.
She told reporters that such a provision is not part of the agreement but is being discussed by congressional leaders.
Also not addressed in this budget deal is the need sometime next year to again raise US borrowing authority.
The reaction from at least one market-watcher was positive. "It is certainly a good start to what would be welcomed relief from the fiscal dysfunction that has defined Washington," said Craig Dismuke, chief economic strategist at Vining Sparks in Memphis.