US Senate agrees two-year $300bn budget deal

The United States Senate agreed a bipartisan budget deal on Wednesday, though doubts remained about whether it would pass the House of Representatives ahead of a looming government shutdown deadline.

With the latest short-term spending Bill due to expire at midnight on Thursday, the senate heralded a “breakthrough” two-year agreement as both parties agreed a funding package that will increase defence spending and other domestic priorities including funding for disaster relief and education centres. In total the Bill will increase government spending by about $300 billion (€244bn) in the next two years.

But as senate minority leader Chuck Schumer welcomed the deal on the senate floor, his counterpart in the House of Representatives, Nancy Pelosi, warned that Democrats could not support a Bill without some commitment to tackle immigration.

"The budget caps agreement includes many Democratic priorities. With the disaster recovery package and dollar for dollar increases in the defence and non-defence budget, Democrats have secured hundreds of billions of dollars to invest in communities across America," she said. But she warned that her party would not support the deal without a promise from House speaker Paul Ryan to schedule a debate and vote on an immigration package, which would involve moves to include so-called "dreamers"– young people who were brought to the US illegally as children.

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Mr Ryan also faces a possible backlash from some fiscally-conservative Republicans who are concerned at the deal’s increase in spending.

Negotiations have been ongoing on Capitol Hill in recent days to avert a government shutdown, with lawmakers acutely aware of the impact a government closure might have on market sentiment, given this week’s stock market turmoil. Market volatility continued to abate on Wednesday as US stock markets rallied, having seen their biggest falls since 2011 on Monday.

Hailing the agreement in the senate on Wednesday, majority leader Mitch McConnell described the deal as a “significant bipartisan step forward”.

“The compromise we’ve reached will ensure that for the first time in years, our armed forces will have more of the resources they need to keep America safe,” he said.

Mr Schumer, the top Democrat in the senate, conceded that the Bill was not perfect, but expressed confidence that a debate on immigration would take place imminently.

Mr Schumer also blasted president Donald Trump who he said had not played any role in negotiating the agreement, but instead threatened "stalemates and shutdowns".

Email scandal

Separately, Mr Trump welcomed the publication of a new report by Republican senators which revives questions about FBI bias in the organisation's handling of the Hillary Clinton email scandal. The report issued by the Homeland Security committee in the Senate on Wednesday, published fresh text messages exchanged between two FBI employees, Peter Strzok and lawyer Lisa Page who were engaged in an extra-marital affair. It claims that they "paint a picture of bias and animus, and certainly raise questions about possible corruption," during the Obama-era investigation, the chairman of the committee said.

Mr Trump reacted on Twitter, describing the new texts as a “bombshell”. His son, Donald Trump jnr, said the reports were a “really big deal”.