US congressional leaders unveil two-year budget deal

• Bipartisan deal will fix federal spending at $1.012tn

• Deal will relieve worst effects of the sequester

theguardian.com, Dan Roberts in Washington, Wednesday 11 December 2013

Senator Patty Murray and Representative Paul Ryan hold a news conference
 to introduce The Bipartisan Budget Act of 2013. Photograph: Jonathan Ernst /Reuters

Congress was on the verge of the first bipartisan budget deal in nearly three decades on Tuesday night after Democrat and Republican negotiators unveiled a proposal to fix federal spending at $1.012tn.

The long-awaited agreement struck between senator Patty Murray and congressman Paul Ryan staves off the threat of another government shutdown for two years and will relieve the worst effects of blanket budget cuts known as the sequester.

Aspects of the deal may alarm both parties, particularly Democrats, who are being asked to accept additional spending cuts, no new taxes and increased pension contributions from public sector workers.

Nevertheless the prospect of ending years of political deadlock appeared to satisfy political leaders of both parties, whose expectations have been lowered by the recent government shutdown and a virtual standstill on a host of other issues.

Barack Obama declared the budget deal “a good first step” and both House speaker John Boehner and and majority leader Eric Cantor indicated they would allow a vote to pass with a mixture of Republican and Democrat support.

Congress has been deadlocked over the budget since Democrats lost control of the House in the 2010 midterm elections and the proposal from Murray and Ryan represents the first realistic chance of a divided government agreeing a formal budget since 1986.

If passed by the House and Senate, the two-year deal would fix federal spending at $1.012tn in 2014 and $1.014tn in 2015 – roughly halfway between the $1.058tn sought by Democrats in the Senate and the $967bn proposed by the Republican-controlled House.

The blanket sequester cuts would be reduced by $63bn over the two years, split equally between defence and non-defence spending, although Republicans also succeeded in negotiating a further $20-$23bn in deficit reduction.

Rather than raising new taxes to pay for the sequester relief – something Republicans were implacably opposed to – negotiators agreed to raise additional government revenue through fees, such as airport charges and by demanding that federal workers pay more toward their pensions.

Union umbrella group, the AFL-CIO, has already hit out at the proposal, arguing that federal workers were acting as a “punching bag” for Republicans.

There was also no agreement over the vexed issue of long-term unemployment benefits, which are due to expire shortly, or any agreement on medicare or social security reforms, which Republicans had been pushing for.

Senator Patty Murray, Democratic chair of the budget committee, admitted much was missing from the deal.

We need to acknowledge that there are long-term structural problems that this deal does not address,” she told reporters. “This deal does not solve all of our problems but it is an important step.”

“For far too long here in Washington DC, compromise has been a dirty word, especially when it comes to the budget,” added Murray.

“For years we have lurched from crisis to crisis. That uncertainty was devastating to our fragile economic recovery.”

Ryan also portrayed the deal as a major breakthrough but played down expectations among his own supporters.

“The agreement is a clear improvement on the status quo ... it makes sure we don't lurch from crisis to crisis,” said the chairman of the House budget committee.

“We have been talking all year, but that hard work has paid off. In divided government you don't always get what you want.”

The proposal, which will be voted on by the House later this week, was also welcomed by the White House.

"This agreement doesn't include everything I'd like – and I know many Republicans feel the same way," President Obama said in a statement. "That's the nature of compromise. But it's a good sign that Democrats and Republicans in Congress were able to come together and break the cycle of short-sighted, crisis-driven decision-making to get this done."