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FT.com
US
Congress strikes bipartisan budget deal
By
James Politi in Washington
US
budget negotiators on Tuesday night struck a bipartisan deal to set
spending levels until 2015, breaking the latest fiscal logjam in
Congress and stopping a cycle of crisis-driven economic policy making
in Washington.
The
agreement is small in size – worth $85bn – but may herald the
return of an era in which Congress can perform basic functions
without the political brinkmanship that has repeatedly threatened the
US economic recovery in recent years.
It
will increase spending in the near term, easing the pain of
“sequestration” budget cuts that began in March and drew the
criticism of the International Monetary Fund for the austerity hit
they imposed on many US government agencies.
“I
think this agreement is a clear improvement on the status quo” said
Paul Ryan, the former Republican vice-presidential candidate and
chairman of the House budget committee. “It makes sure we don’t
lurch from crisis to crisis,” he said on Tuesday night.
President
Obama said in a statement that the deal was a “good first step”
and asked Congress to pass it “so I can sign it into law and our
economy can continue growing and creating jobs without more
Washington headwinds”.
If
the deal is approved by Congress, it would be likely to avert a
government shutdown in mid-January and again at the start of the next
fiscal year in October 2014.
It
does not entirely eliminate the potential for a new budget crisis,
however, since it does not increase the US debt limit. New borrowings
will have to be approved by Congress early next year, a process that
has often been fraught under the Obama White House.
The
rise in spending levels over the next two years to replace
“sequestration” will be worth $63bn, to be paid for by increased
fees on airline travellers, and higher contributions to pensions for
federal workers, including the military.
It
will significantly loosen the belt on US government department and
agencies ranging from the Pentagon to the National Institutes of
Health and the Environmental Protection Agency.
Over
a decade, the agreement will reduce the US deficit by more than $20bn
since the deal adds new cuts to healthcare providers for seniors,
such as hospitals, over the long-term.
Even
as the deal appeared, it faced some opposition from both left and
right which could spell problems in its passing through Congress.
Votes are expected in the House of Representatives later this week,
to be followed by the Senate.
Americans
for Prosperity, a conservative group associated with the billionaire
Koch Brothers, had urged Republicans to vote against the emerging
deal.
“The
American people demanded, and were promised, reasonable spending
limits. Politicians choosing to go back on their promise will be held
accountable for their actions,” said Tim Phillips, president of
AFP, in a statement on Tuesday before the deal was released.
“Republicans
should once again stand firm in upholding the modest sequestration
spending cuts,” Mr Phillips added...
Read
the rest of the article at FT.com
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