US House passes two-year budget deal that averts default

[WASHINGTON] The US House of Representatives on Wednesday passed a bipartisan, two-year budget deal that boosts federal spending by US$80 billion, reduces a government shutdown threat and raises the debt ceiling through the end of Barack Obama's presidency.

Nearly 80 Republicans joined a united front of Democrats in favour of the legislation, which passed 266 to 167.

The deal is the result of weeks of secret negotiations between the White House and outgoing House Speaker John Boehner, who has stated his desire to clear the decks of any fiscal crises before his successor takes the gavel.

Congress must raise the federal borrowing limit by November 3, or risk Washington ending up in default.

The bill now goes to the Senate where it is expected to pass, effectively bringing to a close a series of fiscal fights as the two parties gear up for the 2016 presidential race.

Republican and Democratic lawmakers fought several battles over borrowings between 2011 and 2014 that roiled financial markets, caused an unprecedented downgrade of the country's triple-A debt rating by Standard & Poor's, and forced a partial government shutdown for 16 days in 2013.

Republican Harold Rogers, chairman of the House Appropriations Committee, said it was important to approve the deal so that Congress does not "lurch from one crisis to another." "It's not perfect," Mr Rogers said of the bill. "It's not ideal by any stretch of the imagination. But it's the best we can do with what we have, and the alternative would be disaster." The legislation raises federal spending caps by some US$80 billion until September 30, 2017.

Another roughly US$31 billion in "contingency operations" funding would go to the Pentagon, offset by tweaks to entitlement programs including Social Security.

Several conservative Republicans opposed the deal over the way it was negotiated in secret, but also because it failed to reduce the US$18 trillion deficit.

"Instead of passing this bill, which pushes us in the wrong direction by increasing spending and raising the debt limit, we should have answered the call of the American people to reduce the national debt and balance our budget," House Republican Gary Palmer said.

The deal is one of the final accomplishments for Mr Boehner. Republicans on Wednesday elected Paul Ryan as their candidate to be the next speaker of the House, and a final floor vote is set for Thursday.

AFP