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Abu Dhabi, UAEMonday 17 December 2018

Senate leaders reach $300 billion federal spending deal

Bipartisan agreement needs approval by both houses of Congress and will lift caps on defence spending

Senate minority leader Chuck Schumer helped reach a two-year bipartisan budget deal that adds billions of dollars in federal spending. EPA/SHAWN THEW
Senate minority leader Chuck Schumer helped reach a two-year bipartisan budget deal that adds billions of dollars in federal spending. EPA/SHAWN THEW

The US Senate, in a rare display of bipartisanship, reached a two-year budget deal on Wednesday to raise federal spending by almost $300 billion, in an attempt to end the kind of squabbling over fiscal issues that has plagued Washington for years.

The agreement, announced by both the Republican and Democratic leaders of the Senate, would lift caps on defence funding and some domestic government spending. Along with president Donald Trump’s tax cuts approved by Congress in December, the new round of spending would further add to the bulging federal deficit.

“This bill is the product of extensive negotiations among congressional leaders and the White House,” Senate majority leader Mitch McConnell, a Republican, said on the Senate floor. “We worked hard to find common ground and remained focused on serving the American people.”

The plan will need to be passed in the House of Representatives and the Senate, both controlled by Mr Trump’s fellow Republicans, before going to the president to sign.

But House Democrats have warned that they will not back the deal unless Republican speaker Paul Ryan promises to advance separate legislation on immigration policy.

The conservative House Freedom Caucus also announced that they would oppose the budget proposal that raises debt limits and does away with government spending caps.

The caucus tweeted its official position against the measure, highlighting how the deal would lead to massive expansion of the federal government.

“Official position: HFC opposes the caps deal. We support funding our troops, but growing the size of government by 13 percent is not what the voters sent us here to do,” the caucus said.

Chuck Schumer, the leader of the Senate Democrats, said the deal should break the cycle of partisan fights over spending.

“After months of fiscal brinkmanship, this budget deal is the first real sprout of bipartisanship. And it should break the long cycle of spending crises that have snarled this Congress and hampered our middle class,” Mr Schumer said.

The higher defence spending should allow Trump to make good on a campaign promise for a US military build-up.

The White House said the deal also includes an extension, until March 2019, of the government’s debt ceiling. The treasury department has been warning that without an extension in borrowing authority from Congress, the government would run out of borrowing options in the first half of March.

The agreement also provides funds for disaster relief, infrastructure and programs addressing opioid abuse, the Senate leaders said.

White House legislative affairs director Marc Short said the deal would raise spending by “just shy” of $300 billion. A senior congressional aide said this would not be offset by any spending cuts or new tax revenue, meaning an increase in the federal deficit.

A congressional source familiar with the agreement said it would increase non-defence spending by $131 billion and include $20 billion for infrastructure spending. It also would extend funding for the Children’s Health Insurance Program (CHIP) for 10 years instead of the current six, the source added.

Passage of the plan would ease the brinkmanship over spending that roils Washington so regularly that financial markets barely flinch anymore at the threat of a government shutdown.

Aside from the two-year deal, lawmakers were also trying to reach agreement by Thursday to avoid a shutdown and fund the government until March 23.

If that fails, the US government would suffer its second shutdown this year, after a partisan standoff over immigration policy led to a three-day partial shutdown last month.

Immigration again emerged as a possible point of contention, putting the budget deal in jeopardy. Nancy Pelosi, minority leader of the Democrats in the House, said she would oppose the accord unless Mr Ryan promises to advance legislation to protect hundreds of thousands of young adult immigrants, known as ‘Dreamers’, brought to the United States illegally as children.

Republicans are eager to keep spending and immigration separate. Mr Trump threatened on Tuesday to upend budget talks by saying he would welcome a government shutdown if Congress were not able to agree to changes in immigration law that he said would prevent criminals from entering the country.

January’s shutdown came after Democrats sought to have a spending bill include protections for the Dreamers that Trump has rescinded effective in March.