Signing of Two-Year Bipartisan Federal Budget Bill Averts Another U.S. Government Shutdown

Barack Obama

Last October Americans experienced a 16-day government shutdown. To avoid the same occurrence in January 2014, U.S. President Obama signed a compromise budget deal, a two-year bipartisan federal budget bill. The President also signed a defense bill that will ease the transfer of prisoners held at Guantanamo and suppress the sexual assaults happening in the U.S. military. These are part of the seven legislation items that the President signed this week while on a family vacation in Hawaii.

Bipartisan budget deal

The budget deal was passed by the U.S. Senate on December 18. The negotiation for the budget deal, worth US$1.012 trillion was negotiated by Senator Patty Murray (Dem.) and Senator Paul Ryan (Rep.) who is also the House Budget Committee chairman. Congress now has until January 15, 2014 to pass the fiscal spending bill for 2014 and 2015.

The Defense Bill, approved by the Senate on December 20 just before they went on their Christmas break, gives Pentagon a base budget worth US$526.8 billion for 2014, although this amount still has to be reconciled in January since the budget deal only mentions $498 billion. The defense bill includes several measures for reforming the military justice system in response to the cases of sexual assaults within the military and facilitating the transfer of Guantanamo Bay prisoners to countries that will consent to take them.

This budget deal puts an end to the three-year vitriolic bipartisan warfare that centered on the Obama Healthcare Law, taxes and federal spending that had almost caused the nation to default on its debt twice and plummeted the approval ranking of Congress to historic lows.

Positive and negative outcomes

There will always be compromises when deals are made and this budget deal is no exception. The Republicans got their goal of avoiding tax increases and the Democrats will have their funding for domestic programs and for education. However, the deal will increase security fees at airports, cut back on some pensions for the military and on the retirement benefits of federal employees. It also does not include an extension on the long-term unemployment benefits championed by the President, which means that about 1.3 million people with lose this benefit, which will expire on December 28.

It will enable a significant cut in the country’s budget deficit that is currently at US$680.3 billion though and allow lawmakers to increase the debt ceiling, currently at US$16.7 trillion, to avoid a default.

Business outlook

On the other hand the U.S. economy continues on a path of economic recovery, with manufacturing giving the country a big boost. More jobs, most of which are high paying, are being created by the manufacturing sector, which is now involved in high-tech production of items such as aerospace component parts. To compete with cheaper labor overseas, U.S. manufacturers are getting more productive, using more robotic arms and machines and less manual labor force. Yet, with the increase in production, manufacturers are buying more machines, thus hiring more workers as well.

Photo Credit: President Barack Obama

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