US

US Congress reaches spending deal which may help avoid government shutdown

Framework agreement comes with less than two weeks to go until a government funding deadline

US president Joe Biden welcomed the news, saying in a statement that the funding framework 'moves us one step closer to preventing a needless government shutdown'. Photograph: Kenny Holston/The New York Times

Sun Jan 7 2024 - 21:37

US Republican and Democratic leaders on Capitol Hill have reached an agreement on the level of federal spending for 2024 in a breakthrough that moves Congress closer to avoiding a costly government shutdown.

The news was jointly announced by Chuck Schumer, the Democratic Senate majority leader, and Mike Johnson, the Republican Speaker of the House, on Sunday. The framework agreement comes with less than two weeks to go until a government funding deadline.

In a joint statement with Hakeem Jeffries, the top House Democrat, Mr Schumer said the agreement “clears the way for Congress to act over the next few weeks in order to maintain important funding priorities for the American people and avoid a government shutdown”.

In a letter to Republican colleagues on Sunday afternoon Mr Johnson said Republicans had “secured hard-fought concessions” and even though the levels of spending from the 2023 fiscal year would be unchanged there would be an additional $10 billion in cuts to the Internal Revenue Service.

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US president Joe Biden welcomed the news, saying in a statement that the funding framework “moves us one step closer to preventing a needless government shutdown and protecting important national priorities”. –

The deal sets the cap for the 12 annual spending bills at $1.59 trillion and Republicans have agreed a set of budget moves that Democrats demanded to spare immediate cuts to domestic agency budgets. These moves, which conservatives have decried as “gimmicks,” could lead some Republicans to refuse support.

Yet the deal lacks an agreement to block all conservative policy riders, so the chance of a fight over demands such as defunding investigations into former President Donald Trump could still cause an impasse later.

Johnson presented the deal to his colleagues in a letter on Sunday.

The US is facing two government shutdown deadlines after January 19th and February 2nd. Without fresh appropriations, the departments of Agriculture, Transportation, Housing and Urban development, Energy and Veterans Affairs would shut down on January 20th Republicans and Democrats have been at odds over the spending level, stalling all of the 12 appropriations bills.

A June law lifting the US debt ceiling set a spending cap of $1.59 trillion for discretionary spending. A so-called side deal between President Joe Biden and former House Speaker Kevin McCarthy would have allowed $70 billion in accounting moves to be used to achieve the cuts required by the cap.

Democrats said they secured the same amount of domestic funding allowed by the debt-ceiling “side deal.”

The deal presented on Sunday includes $16 billion in offsetting spending cuts above the debt-ceiling agreement to take effect in 2024. That includes speeding up $10 billion in cuts to the Internal Revenue Service and canceling an additional $6 billion in unspent Covid-19 pandemic funds.

A shutdown could still happen if lawmakers fail to agree on spending levels for those federal agencies that shut down after January 19th, or on whether some conservative policy demands will be added.

Some conservatives are pushing Johnson to use the shutdown deadline to force Biden to accept changes in border policy. But until now, Republican leaders have called for dealing with the border issue as part of a separate request by Biden for some $61 billion in aid to Ukraine.

The Financial Times/Bloomberg

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