World Economy

US Congress Reaches Tentative Budget Deal

US Congress Reaches Tentative Budget DealUS Congress Reaches Tentative Budget Deal

US congressional leaders have reached a tentative budget deal with the White House in a breakthrough that would set government funding levels for the next two years and extend the nation’s debt limit through 2017. The bill would raise the spending caps set in place in 2011 that would result in deep cuts to both defense and non-defense spending, called sequestration. This deal would provide $80 billion in sequester relief.

The bipartisan agreement would include long-term entitlement reforms to the Social Security Disability Insurance program, the first major reform to social security since 1983. The SSDI program would be amended, in part to tighten and standardize eligibility requirements that now vary by state. That change was projected to save the government $5 billion. It also prevents a spike in Medicare B premiums for millions of seniors. The increases would have been caused by the rare absence of a cost-of-living increase in social security benefits, because of unusually low inflation, reported.

The deal still needs congressional approval, but for outgoing House Speaker John Boehner, this was a matter of wrapping up unfinished business before his departure, or as Boehner described it “cleaning the barn.” Representative Paul Ryan, the likely successor to House Speaker said he would likely vote for the deal but he said “the whole process stinks.”

The US plans to sell millions of barrels of crude oil from its Strategic Petroleum Reserve from 2018 until 2025 to pay for spending in that budget bill. The proposed sale equates to more than 8% of the 695 million barrels of reserves. Sales are due to start in 2018 at an annual rate of 5 million barrels, rising to 10 million by 2023 and totaling 58 million barrels by the end of the period.

Also, the two-year budget deal produces savings from one of the most popular programs in farm country, federally subsidized crop insurance, and farm state lawmakers are furious. Senators and House members said they weren’t notified of the cut before the deal was struck.

Budget-writers in Washington have long eyed the crop insurance program, which costs more than $9 billion annually, as a pot of available money. But farm-state lawmakers have fought to protect it, saying it makes more sense than other farm subsidies since it pays out when farmers suffer losses. Meanwhile, 62 Republicans have joined 184 Democrats to pass a “discharge petition” to renew the Export-Import Bank’s charter. Monday’s vote means that, barring any other last-minute obstacles, a vote on reauthorizing the bank should pass the House shortly. The bill would then go to the Senate, where it awaits an uncertain fate.