LAST week's deal to end the US federal government shutdown and raise the US$17.6 trillion debt limit amounted to nothing more than a ceasefire in the partisan fiscal battle: Funding of the federal government until Jan 15 and raising the debt ceiling until Feb 7. In practical terms that means the world could witness another sequel to the game of brinkmanship over the US budget early next year, including another shutdown of the government and renewed threats to allow it to default.

The deal did come up with a legislative mechanism to help avert fiscal warfare by establishing a congressional committee consisting of leading Democratic and Republican lawmakers whose task would be to complete work on a 10-year US budget plan by Dec 13 that would reconcile separate budget plans approved by the Democratic-controlled Senate and the Republican-led House of Representatives early this year. In turn, that kind of agreement could serve as the basis for a "grand bargain" on fiscal policy between the White House and Congress, turning the current ceasefire into a long-term peace agreement between the two rival powers on Capitol Hill. But the expectation that the so-called budget conference committee, led by Representative Paul Ryan of the Republican party and Senator Patty Murray, his Democratic counterpart, will succeed in reaching such a deal before this Christmas remains very low.

One sticking point is the disagreement between the two sides on how to adjust the across-the-board automatic spending cuts that began in March. The Democrats assert that the economic austerity produced by the spending cuts hurts the middle class and the poor and slows down the economic recovery, while the Republicans argue that major cuts in the large government-funded social-economic programmes are necessary to reduce the federal deficit. But central to these policy disagreements is the wide ideological divide between the two political parties, with Democrats saying that more tax revenue is necessary in order to reduce the deficit, and Republicans arguing that spending cuts will do the job.