Thu, Dec 12, 2013 - Page 7 News List

US reaches bipartisan deal on budget

BABY STEPS:Although the agreement was a modest one and does not address the main drivers of federal spending, it was lauded by Barack Obama as a ‘good first step’


In a rare show of bipartisanship, US Congressional negotiators reached a modest US budget agreement on Tuesday to restore about US$63 billion in automatic spending cuts from programs ranging from parks to the US Department of Defense and eliminate the threat of another federal 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 US$85 billion over a decade, leaving enough for a largely symbolic cut of about US$23 billion in the nation’s debt, now at US$17 trillion and growing.

The White House quickly issued a statement from US 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 Tea Party-aligned groups have already begun pushing Republican lawmakers to oppose it.

The US federal budget year begins on Oct. 1, but Congress could not agree to a budget plan at the time and the government was partially shut down temporarily. The fight centered on Republican attempts to block funding for Obama’s overhaul of the healthcare system.

The US also came close to the first-ever federal default when Congress could not reach agreement on raising the debt ceiling. Republicans only 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.

The announcement of the new deal came in the form of a statement from the two negotiators, US Senator Patty Murray, a Democrat, and US Representative Paul Ryan, a Republican. The lawmakers chair the budget committees in the Democrat-controlled Senate and the Republican-led US House of Representatives respectively and negotiated the deal in secretive talks.

The legislation that ended the 16-day partial shutdown in October expires on Jan. 15 and Tuesday’s agreement stipulates a new spending level for the remainder of this budget year and the next.

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

However, it does not address three of the big drivers of US deficit spending: the federal Medicare 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, while liberals are angered about the requirement that federal employees 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 Dec. 28, when payments will be cut off for an estimated 1.3 million individuals.

Officials said that under the agreement, about US$63 billion in automatic spending cuts would be restored through the end of the next budget year on Sept. 30, 2015. The offsetting US$85 billion in deficit cuts would play out over a decade.

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