White Smoke in DC

By Isaac Cohen*

After years of intense haggling and spectacular posturing, in Washington DC, Republicans and Democrats reached a bipartisan agreement on the US federal budget. Negotiations were low keyed and devoid of dramatic gestures, but the result was limited and partial. In simpler terms, the agreement does not cover “the whole enchilada.”

One of the main reasons was precisely that the negotiators, led by Representative Paul Ryan (R., Wisconsin) and Senator Patty Murray (D., Washington), focused on a limited, therefore viable agreement.

As a result, federal government spending will increase by $63 billion over the next two years, while the budget deficit will be reduced by $22.5 billion, during the next ten years. Some fees for services will increase, such as those for airport security, which will be translated into increases in the cost of airline tickets. Additionally, the contribution by newly hired federal workers and the military to their pensions will increase from 0.8 to 1.3 percent. However, the main accomplishment is that, for the next two years, it will be impossible to threaten the shutdown of the federal government. As described by Senator Patty Murray, the uncertainty caused by the threats to shutdown the government was “devastating for our fragile economic recovery.”

Many issues were left out, such as extending unemployment benefits for the long term unemployed, or changes in social programs, as Medicare or Social Security. But, as Congressman Paul Ryan said, “in divided government you don’t always get what you want.”

*International analyst and consultant. Commentator on economic and financial issues for CNN en Español TV and radio. Former Director, UNECLAC Washington Office.

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