Republicans, Obama reach Budget deal

Accord, which has yet to be approved, would avert debt default, end long-running battle

WASHINGTON • After five years of bitter clashes, Republican congressional leaders and President Barack Obama appear to have settled their last budget fight with a tentative deal that would modestly increase spending over the next two years, cut some social programmes and raise the federal borrowing limit.

The accord, which must be approved by the House and the Senate, would avert a potentially cataclysmic default on the government's debt and dispenses with perhaps the most divisive issue in the capital just before Speaker John Boehner is expected to turn over his gavel to Republican Paul Ryan of Wisconsin this week.

Shortly before midnight on Monday, House Republicans posted the text of the 144-page Bill, which was labelled a "discussion draft" but appeared to reflect the tentative agreement as described by congressional aides throughout the day.

The agreement would raise spending by US$80 billion (S$111 billion) over two years, not including a US$32 billion increase included in an emergency war fund. Those increases would be offset by cuts in spending on Medicare and social security disability benefits, as well as savings or revenue from an array of other programmes, including selling oil from the nation's strategic petroleum reserves.

The US$80 billion increase amounts to little more than 1 per cent per year of the nearly US$4 trillion annual federal budget, but would represent a major breakthrough after years of gridlock in Congress, as each side compromised on core issues. It frees Mr Obama from budget battles and gives clean starts to Mr Ryan as Speaker and to Republicans trying to persuade voters that they can be an effective governing majority.

For Mr Boehner, the deal would deliver on his pledge to clean up "the barn" by dispensing of potential crises in a way that he hoped would silence critics who said that he had under-delivered.

An official said the deal fulfilled all of Mr Boehner's goals by securing long-term changes in social programmes, offsetting spending increases with cuts or savings; increasing military spending; achieving a net reduction in the deficit; and locking in an agreement on spending for the 2017 fiscal year.

Democrats, too, said that they had achieved their goals, particularly lifting the prior spending caps and by assuring roughly equal increases to military and non-military programmes. The Treasury Department had said that the government would default on its debt if the statutory borrowing limit was not raised by Nov 3.

The tentative agreement would keep the government financed through Sept 30, 2017, well after Mr Obama leaves office. And the debt limit would be raised - technically suspended, allowing the Treasury to borrow whatever it needs - until March 2017.

NEW YORK TIMES

A version of this article appeared in the print edition of The Straits Times on October 28, 2015, with the headline 'Republicans, Obama reach Budget deal'. Print Edition | Subscribe