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US lawmakers announce two-year budget deal to avoid gov't shutdown

WASHINGTON -- Congressional negotiators reached a modest two-year U.S. budget deal Tuesday that would avoid a repeat of October's government shutdown, signaling a temporary truce in fiscal wars that have paralyzed Washington.

The agreement, brokered by Democratic Senator Patty Murray and House Republican Paul Ryan, sets the new annual budget caps for 2014 and 2015 at just over US$1 trillion — slightly higher than current levels — and partially repeals the unpopular automatic budget cuts known as “sequestration.”

Importantly, a budget bill under the agreed framework would free legislators to focus on how to reduce the main drivers of the country's debt, such as entitlement programs including Medicare, without the specter of a budget showdown every six or 12 months.

“I see this agreement as a step in the right direction,” Ryan, the 2012 Republican vice presidential nominee and chairman of the House Budget Committee, told reporters, noting that the deal does not raise taxes on Americans.

Murray, the Senate's top budget chief, said she and negotiating partner Ryan set aside political differences and have “broken through the gridlock and reached a bipartisan budget compromise that will prevent a government shutdown in January.”

President Barack Obama hailed the agreement as a sign of rare bipartisan cooperation in the strife-filled U.S. legislature.

“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,” he said.

Under a deal reached in October that ended a crippling 16-day shutdown, federal spending authority expires on Jan. 15, when a new budget will need to be in force.

Tuesday's deal — the first by a divided Congress since 1986, according to Ryan — provides for US$85 billion in mandatory savings while creating US$63 billion in sequestration relief, leaving roughly US$22 billion in deficit reduction.

Obama said he was pleased the deal worked toward replacing sequestration cuts that he said have “served as a mindless drag on our economy over the last year.”

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