US Congress cross-party budget deal reached

Senator Patty Murray (right) and Congressman Paul Ryan (left) were picked to head a cross-party budget committee in the wake of an October government shutdown

A cross-party Congressional budget committee convened after an October government shutdown has reached an agreement on the federal budget.

The proposed deal funds the government for two years and reduces the federal deficit by up to $23bn (£14bn).

It also avoids another government shutdown on 15 January when government funding is scheduled to run out.

The new deal "cuts spending in a smarter way," Republican Congressman Paul Ryan said on Tuesday.

'Gridlock'

The budget deal also offsets $63bn in previously enacted automatic military and domestic spending cuts triggered in January when Democrats and Republicans failed to reach a budget compromise.

Mr Ryan and Democratic Senator Patty Murray, the respective chairs of the House and Senate budget committees, were called on to reach a cross-party budget deal in the wake of October's partial government shutdown over federal spending.

"We have broken through the partisanship and gridlock," Ms Murray said of the new deal.

Mr Ryan said he was optimistic the new budget agreement could pass both sides of the highly politically divided Congress.

The measure is expected to come to a vote before the House recesses for several weeks beginning on Friday.

According to the Congressional budget chairs, the new deal does not raise taxes but requires newly hired federal workers to make larger contributions to their pensions.

A federal airport security fee adding $5 to the cost of a typical return flight is also included.

Nature of compromise

House Speaker John Boehner has publicly backed the cross-party budget deal (file photo)

Following the announcement on Tuesday, Republican House Speaker John Boehner called the "modest" cross-party deal a "positive step forward".

US President Barack Obama issued a written statement labelling the agreement "balanced" and "designed in a way that doesn't hurt our economy".

"This agreement doesn't include everything I'd like - and I know many Republicans feel the same way. That's the nature of compromise," he said.

But, "because it's the first budget that leaders of both parties have agreed to in a few years, the American people should not have to endure the pain of another government shutdown for the next two years," he added.

Government officials say the deal, which sets discretionary defence and domestic spending at $1.012 trillion for the current fiscal year, aims to carve $20bn - $23bn from the nation's $642bn annual budget deficit.

Political rancour

The deal is expected to pass both houses of Congress, despite attempts by Conservative groups to persuade Republicans to oppose it.

Democratic lawmakers have also expressed frustration over a failed bid to extend benefits for people unemployed longer than 26 weeks.

That program will expire on 28 December, cutting off benefits to more than one million individuals.

But many have praised the cross-party deal as a crucial step forward after political rancour led to a 16-day government shutdown in October which halted many federal services across the country.

The manoeuvre is said to have cost the US economy $24bn, as projected by financial services company Standard & Poor's.

Under a temporary deal reached to end that political standoff, the newly-formed budget conference committee was given until 13 December to come up with a new deal or face triggering further automatic spending cuts.