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Yes, Virginia, there is a deal

By Mark Hamrick · Bankrate.com
Wednesday, December 11, 2013
Posted: 2 pm ET

After toiling mostly out of public view over the past two months, budget leaders from both parties and both houses of Congress announced a budget agreement intended to avoid government shutdowns in 2014. It awaits votes in the House and Senate where prospects for approval appeared positive.

House Speaker John Boehner, R-Ohio, acknowledged the deal was "modest in scale" while providing "permanent reforms to mandatory spending programs that will produce real, lasting savings." It replaces some of the across-the-board spending cuts known as "the sequester." Boehner blasted criticism coming from some conservative quarters as "ridiculous."

Specifically, it would fund federal agencies through the fall of 2015, dodging the embarrassing and damaging deadlock spectacles in recent years. It heads off a new round of Pentagon budget cuts that were coming due in January and reduces the deficit by more than $20 billion over the next decade. The deal was announced by the lead negotiators, Sen. Patty Murray, D-Wash., and Rep. Paul Ryan, R-Wis.

While echoing budget negotiators' admissions that the deal doesn't provide everything he'd like, President Barack Obama said it was worthy of support. Obama called it "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 the deal done.

Both sides hailed the deal saying it doesn't raise taxes. But it hikes "airline security fees" on passengers by $5 for every nonstop, round-trip ticket to raise more than $12 billion over the next decade. It also reduces contributions to pensions of military retirees and federal workers. The president of the American Federation of Government Employees, representing 670,000 workers, called that "unacceptable."

Democrats were not successful in adding language to extend unemployment benefits set to expire this month for 1.3 million Americans. House Minority Leader Nancy Pelosi, D-Calif., said it was "unconscionable" to fail to address the problem.

The deal also fails to raise the debt ceiling, which will need to be addressed in the coming months.

The failure to address long-term budget challenges draws criticism from Sterne Agee chief economist Lindsey Piegza. She says it doesn't "do anything to meaningfully reduce the deficit or address entitlement programs." She calls it a "non-event" for financial markets which she says are looking ahead to next week's Federal Reserve meeting.

Members of the House and Senate are expected to vote on the budget deal before leaving Washington for the holidays in the coming days.

Follow me on Twitter: @hamrickisms.

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