Cross-party deal marks truce in two years of US budget battles

The cross-party Congressional deal that would fund the US government for two years is significant not for the mild tonic it offers America’s anaemic fiscal health but for the long-absent dose of bipartisanship it injects into the US body politic.

The accord marks a truce in more than two years of budget battles between Democrats and Republicans that has paralysed American politics since the Republicans wrested control of the House of Representatives in 2010, culminating in a damaging 16-day government shutdown in October.

While the deal averts the threat of another shutdown on January 15th, when a stopgap funding deal expires, it does nothing to address the other contentious issue, the country’s borrowing limit, the so-called debt ceiling that Republicans are opposed to raising.

The agreement is relatively minor in scale; it’s worth $85 billion (€63 billion) in new government revenues and spending cuts, and shaves just $23 billion off the country’s $17 trillion debt pile.

Under the proposal the fiscal year deficit would come in slightly above the $1 trillion mark, in excess of the $967 billion limit previously proposed by House Republicans. But, more importantly, it could be the beginning of the end of the protracted political brinkmanship that has hampered US economic growth.

Negotiated by Democratic senator Patty Murray and Republican congressman Paul Ryan, the respective heads of the Senate and House budget committees, the deal replaces $63 billion (€47 billion) of unpopular, indiscriminate domestic and military spending cuts that came into effect earlier this year, a by-product of earlier failed budget negotiations, with $23 billion of targeted savings.

Appearing at the US Capitol on Tuesday night, Murray and Ryan said the agreement would end the US government lurching from crisis to crisis, noting a rare moment of compromise between the parties.

President Barack Obama described the deal as a “good first step.”

The agreement will require government workers to make larger contributions to their pensions, force travellers to pay higher fees on airline tickets to fund airport security, and cut hospital payments.

Sceptical House Republicans were warm to the deal in private meetings yesterday as Ryan made his pitch. These are the same politicians who succumbed to the far-right Tea Party faction in September, tying their opposition to Obama’s signature healthcare law to a budget deal, shutting the government. “We feel very good about where we are with our members,” Ryan said afterwards.

While many House Republicans found problems with the deal, there doesn’t appear to be the same opposition within the party that led to the collapse of past budget deals.

Not everyone in the Republican camp was happy. Senators Marco Rubio of Florida and Rand Paul of Kentucky, who along with Ryan are tipped as potential presidential candidates in the 2016 race for the White House, came out in opposition soon after the agreement was unveiled.

Far-right conservative groups such as Americans for Prosperity, backed by billionaire brothers Charles and David Koch, also moved quickly to mobilise Republicans against the agreement, threatening to “hold members accountable” if the same spending cuts due to kick in this year were not maintained.

Republican House speaker John Boehner fought back, seeking to coral party support behind the deal against these cash-rich groups who carry such influence ahead of a costly midterm election year.

“They’re using our members and they’re using the American people for their own goals. This is ridiculous,” said Boehner.

Even with a few hardline Republicans rebels likely to vote against the deal, it is expected there will be enough Republicans and Democrat votes to pass a Bill in the House as early as today.