US Senate passes budget deal, focus shifts to spending

WASHINGTON (REUTERS) - The US Senate passed a two-year budget deal on Wednesday to ease automatic spending cuts and reduce the risk of a government shutdown, but fights were already breaking out over how to implement the budget pact.

By a vote of 64-36, the Senate sent the measure to President Barack Obama to be signed into law, an achievement for a divided Congress that has failed to agree on a budget since 2009.

"All told, it's a good first step away from the short-sighted, crisis-driven decision-making that has only served to act as a drag on our economy," Obama said in a statement.

He also urged Congress to pass an extension of long-term unemployment benefits that expire at year-end for some 1.3 million jobless Americans, a move sought by Democrats that was not part of the deal struck by Republican Representative Paul Ryan and Democratic Senator Patty Murray.

The budget measure, passed in the House of Representatives last week by an overwhelming margin, restores overall fiscal 2014 spending levels for government agencies to US$1.012 trillion (S$1.3 trillion), trimming the across-the-board budget cuts that were set to begin next month by about US$63 billion over two years.

It pays for the additional near-term spending with a variety of other savings, including increased airport security fees paid by airline passengers and pension benefit cuts for new federal employees and working-age military retirees.

Wednesday's vote fired the starting gun on a mad dash by the House and Senate Appropriations committees to assemble a massive spending bill that implements the deal and carves up the funding pie among thousands of government programs from national parks to the military.

Without the new spending authority, the federal government on Jan 15 could partially shut down, as it did for 16 days last October.

Not surprisingly, one of fights ahead involves funding of"Obamacare," the president's signature healthcare law, according to Republican and Democratic aides in the House and Senate.

"It's one of many flashpoints," said a House Republican aide who asked not to be identified, adding, "But it's not insurmountable."

Republicans are warning that they will not tolerate any increase in funding for administering the troubled health insurance reform law. Democrats hope to maintain or add small amounts of money for the programme they say will provide healtcare to millions of previously uninsured people.