Congressional leaders reach a spending deal, setting off a race to pass it

WASHINGTON, Jan 7 (Reuters) – The top Democrat and Republican in the U.S. Congress on Sunday agreed on a $1.59 trillion spending deal, setting up a race between sharply divided lawmakers to pass bills that would appropriate the money before Gov. to start closing down this month.

Since early last year, the House and Senate Appropriations Committees have been unable to agree on the 12 annual bills needed to fund the government for the fiscal year that began Oct. 1 because of disagreements over the total amount of money , which must be spent.

When lawmakers return Monday from recess, those panels will begin intense negotiations on how much various agencies, from the Departments of Agriculture and Transportation to Homeland Security and Health and Human Services, should spend in the fiscal year that runs through Sept. 30.

They face a Jan. 19 deadline for the first set of bills to pass Congress and a Feb. 2 deadline for the rest.

There were already some disagreements between the two sides about what they had agreed to. House Republican Speaker Mike Johnson said in a statement that the top figure included $886 billion in defense and $704 billion in non-defense spending. But Senate Majority Leader Chuck Schumer, in a separate statement, said non-defense spending would be $772.7 billion.

Last month, Congress authorized $886 billion for the Defense Department this fiscal year, which Democratic President Joe Biden signed into law. Allocators will now fill in details of how it will be distributed.

The non-defense discretionary funding would “protect key domestic priorities such as veterans benefits, health care and nutrition assistance” from cuts sought by some Republicans, Schumer and House Democratic Leader Hakeem Jeffries said in a joint statement .

Last spring, Biden and then-House Speaker Kevin McCarthy reached an agreement on $1.59 trillion in spending for fiscal year 2024, along with increased borrowing authority, to avoid a historic default on the U.S. debt.

But as soon as that was passed, a battle broke out over a separate private agreement between the two men for about $69 billion in additional non-defense spending.

A Democratic aide on Sunday said $69 billion in “adjustments” were part of the deal announced Sunday.

Another source briefed on the deal said Republicans won a “discount” of $6.1 billion in unspent COVID aid money.

A false dawn?

The agreement on the top spending number could represent little more than a false dawn if hardline Republicans in the House of Representatives follow through on their threats to block the spending legislation unless Democrats agree to limit the flow of migrants across the US-Mexico border — or if they balk at the deal forged by Johnson and Schumer.

The hardline conservative House Freedom Caucus criticized the spending deal reached on Sunday, describing it as a “total failure” in a statement on social media platform X.

Biden said Sunday that the deal brings the country one step closer to “preventing an unnecessary government shutdown and protecting important national priorities.”

“This reflects the funding levels I have agreed upon with both parties,” Biden said in a statement after the deal was announced.

The top Senate Republican, Mitch McConnell, said he was encouraged by the agreement.

“America faces serious national security challenges, and Congress must act quickly to provide the year-round resources that this moment demands,” he said in a statement.

Unless both houses of Congress — the Republican-controlled House and the Democratic-dominated Senate — can pass the 12 bills needed to fully fund the government, money will run out Jan. 19 for federal programs that include transportation, housing, rural economy, energy, veterans and military construction. Funding for other government areas, including defense, will continue until February 2.

Hardline House Republican Chip Roy said the spending cap agreed to Sunday was “terrible.”

In his letter, Johnson said “the final spending levels will not please everyone, and they do not cut as much spending as many of us would like.”

The past year has been chaotic for Congress, where Republicans pushed Washington to the brink of bankruptcy and then paralyzed the body for weeks by ousting one House speaker and scrambling to find a replacement. Congress also came within hours of a government shutdown in September.

Johnson’s narrow 220-213 majority was cut by one because No. 2 Republican Steve Scalise will not vote as he undergoes cancer treatment. Johnson’s predecessor, McCarthy, was ousted by his own party after passing a government shutdown-preventing bill that required Democratic votes to pass

(Reporting by Kanishka Singh, Richard Cowan, David Morgan and Jason Lange; Editing by Scott Malone, Caitlin Weber, Bill Berkrot, Cynthia Osterman and Diane Craft)

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