Congress reaches 2-year federal budget deal

Congress has passed a two-year bipartisan budget deal that would decrease the odds of a government shutdown and replace the sequestration cuts with more targeted spending reductions.

The deal sets discretionary spending, including both defense and non-defense appropriations, at $1.01 trillion for the current fiscal year, with an increase of just $2 billion next year. Non-defense discretionary spending would total approximately $491 billion in 2014, up from $470 billion in 2013.

“Non-defense discretionary” is the broad budget category that funds most government programs that reach the local level, from Title 1 and IDEA education funding to the Community Development Block Grant program and competitive public safety grants, for example.

The budget agreement, which the president has said he will sign, sets the broad framework for the federal budget, but does not identify spending for specific programs. Negotiations have begun to allocate the $1.01 trillion among the up to 12 individual spending bills that will constitute the final omnibus budget bill.

The continuing resolution currently funding federal government operations will run out on Jan. 15, and short-term extensions may be necessary if the omnibus budget bill is not enacted by that time. When enacted, it will become the first federal budget signed into law since 2009.

The congressional budget agreement does not address the debt ceiling, which the nation will reach in February. When the debt ceiling is reached, an increase becomes necessary to allow the Treasury to continue paying debts already incurred.

On Oct. 1, the federal government ran out of funding and shut down for 16 days. A deal to reopen government was reached only as the nation was about to hit its debt ceiling on Oct. 17, after a bond rating agency indicated the nation’s bond rating status was about to be downgraded due to a heightened risk of default. The shutdown had an estimated cost to the national economy of $24 billion.