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US agrees budget deal to avoid January sequester

by James Phillipps on Dec 11, 2013 at 08:06

US agrees budget deal to avoid January sequester

The US has agreed a budget deal early for the first time in two years that will enable the country to avoid a potential January shutdown and sequestration.

The agreement, thrashed out by Congress and the Senate, will see both domestic and military spending rise over the next two years. Taxes will not be cut, but there will be a rise in air fares and pension payments to federal workers.

House budget chairman Paul Ryan described the move as a 'step in the right direction', adding 'in divided government, you don't always get what you want. That said, we can still make progress to our goals.'

The bipartisan agreement will prevent around $65 billion of sequester in January and also includes $25 billion of Medicare savings through to 2023. In a sign of the compromise reached, the Republicans begrudgingly accepted the rise in spending, while Democrats had to stomach no extension to the unemployment benefits of 1.3 million workers that expire this month.

President Obama said in a statement: 'The agreement doesn't include everything I'd like and I know many Republicans feel the same way. That's the nature of compromise, but it's a good sign that Democrats and Republicans in Congress were able to come together and break the cycle of short-sighted, crisis-driven decision-making to get this done.'    

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