White House, Congress Reach Tentative Budget Deal

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U.S. Speaker of the House John Boehner delivers his remarks before signing H.R. 1735, "The National Defense Authorization Act," on Capitol Hill in Washington October 20. Boehner presented details of a two-year budget deal to his rank-and-file in a closed-door meeting early on Tuesday with the hope of advancing it to a floor vote by Wednesday and sending it to the Senate for passage. Gary Cameron/Reuters

WASHINGTON (Reuters) - The White House and congressional leaders reached a two-year budget deal overnight to lift mandatory spending caps on defense and domestic programs and raise the federal debt ceiling, in an attempt to avert yet another fiscal standoff.

U.S. House of Representatives Speaker John Boehner presented details of the pact to his rank-and-file in a closed-door meeting early on Tuesday with the hope of advancing it to a floor vote by Wednesday and sending it to the Senate for passage.

Republican Representative Paul Ryan, who is expected to be elected to the top House job of speaker on Thursday, replacing the retiring Boehner, told reporters he was reserving judgment on the agreement until he reviewed its details.

And in a nod to rebellious fellow Republicans who are clamoring for changes in the way the Republican-controlled House is run, Ryan added, "I think this process stinks," hinting that "under new management" work will get done well before deadlines.

If Congress does not act quickly to raise the debt ceiling, the federal government could begin moving into default next week because the Treasury Department would no longer be able to borrow money to pay Washington's bills. It has estimated that funds will be mostly exhausted next Tuesday.

Beyond that, Congress must agree to new spending for an array of federal programs by Dec. 11 or risk shutting down much of the government. The two-year budget deal that was negotiated provides top-line spending numbers; appropriators will still have to hash out specifics by mid-December.

Representative Thomas Massie, a hard-line conservative, acknowledged that he and other opponents will not be able to stop the budget and debt limit deal. They oppose the higher spending.

"We're going to lose," he told reporters.

A White House official said that the compromise deal would protect Social Security and Medicare beneficiaries from cuts, and urged members of Congress from both the Republican and the Democratic parties to pass it.

"It's a responsible agreement that is paid for in a balanced way by ensuring that hedge funds and private equity firms pay the taxes they owe and by cutting billions in wasteful spending," the official said in a statement.

Under the plan, the higher borrowing authority would be in effect until March 2017.

In addition, 58 million barrels of oil from U.S. emergency reserves held at the Strategic Petroleum Reserve would be sold over six years, starting in fiscal 2018, to help pay for the additional spending over two years, according to a copy of the bill posted to a congressional website.

If successful, the agreement would mark a final act for Boehner to clear some politically divisive legislation as Ryan takes over as speaker - assuming the Wisconsin lawmaker gets a majority of the House votes in an election set for Thursday that would win him the top job.

Central to the pact is the easing of across-the-board budget caps which would allow an additional $80 billion in spending over two years, split evenly between military and domestic programs. About $50 billion in added spending would come in fiscal 2016, which started on Oct. 1, and $30 billion would be added to the fiscal 2017 budget.

"The bipartisan budget package unveiled last night represents real progress for hard-working families across the country," House Democratic leader Nancy Pelosi said in a statement.