Budget deal averts US federal shutdown

Barack Obama said the budget invests in the future of Americans, despite some of the cuts being painful [AFP]

A dramatic eleventh-hour deal between Democrats and Republicans over the budget has staved off a US government shutdown.

“We have agreed to an historic amount of cuts,” John Boehner, the House of Representative speaker, and Harry Reid, the Democratic Senate majority leader, said on Friday in a joint statement that capped months of bitter feuding over reining in Washington in the face of a galloping deficit.

“This agreement between Democrats and Republicans on behalf of all Americans is on a budget that invests in our future while making the largest annual spending cut in our history,” Barack Obama, the US president, said at the White House after the deal was reached.

“Some of the cuts we agreed to will be painful … and I would not have made these cuts in better circumstances,” he said.

“But beginning to live within our means is the only way to protect those investments that will help America to compete for new jobs.”

Boehner said that the deal had been struck on funding the federal government for the rest of the fiscal year that ends on September 30.

“I am pleased Senator Reid and I and the White House have been able to come to an agreement that will in fact cut spending and keep our government open,” Boehner told reporters.

“It is a big victory for John Boehner and the Republicans as they got more spending cuts than they initially wanted, which Democrats had termed draconian. It does look like Republicans came out on top, Andrew Stiles, political reporter, National Review Online, said.

“Republicans ran in 2010 elections promising to cut spending and Boehner has been saying this all along. He has shown he fought for cuts,” he said.

Intense bargaining

Party leaders clinched the agreement, including some $38.5bn of extra spending cuts, after an intense political bargaining, barely an hour before the federal government was to run out of money at midnight (0400 GMT).

Al Jazeera correspondent Cath Turner, reporting from Washington, said: “There’s a big sigh of relief across the country. Both the sides have agreed to sign a short-term continuing resolution that would give the government six more days to fine tune the budget. However, there are still some debate as to which programmes will be cut.”

“Next week there will be more negotiations before official fiscal budget for 2011 will be announced,” she said

“Both sides will try to spin as next year is an election year and they would try to tell their electorate that they stood up for what their party believed in.”

A shutdown – the first in more than 15 years – would have seen around 800,000 federal employees temporarily laid off, paychecks for frontline combat soldiers delayed and national parks and monuments closed, while potentially undermining the US economic recovery.

But operations vital to national security like the war in Afghanistan and border services would have gone on as normal.

“Tomorrow, I’m pleased to announce that the Washington monument as well as the entire federal government will be open for business,” Obama said.

Meanwhile, the Senate hurriedly approved a short-term funding bill to keep the government running until the longer budget plan can be enacted into law sometime next week.