April 9 (Bloomberg) -- President Barack Obama said the budget deal he struck with Congress is a “worthwhile compromise” that will keep government offices open and paychecks flowing to federal employees and military personnel.
The president announced the agreement from the White House with less than an hour to spare before agencies would have had to begin closing many operations for lack of government spending authority.
“Both sides had to make tough decisions and give ground on issues that were important to them,” Obama said. “But beginning to live within our means is the only way to protect those investments that will help America compete for new jobs.”
The agreement to slice $38.5 billion from about $3.5 trillion in spending for fiscal year 2011 prevented the first shutdown of the federal government in 15 years, which would have closed national parks, suspended tax audits and barred 800,000 federal employees from work beginning at midnight.
Obama’s remarks were followed by quick approval by the Senate and House of Representatives of a temporary spending measure that will fund government operations until April 14th while lawmakers draft legislation for the broader budget agreement. Obama signed the temporary measure today.
Democrats accepted the spending cuts after an agreement was reached to jettison some Republican provisions that would have cut funds for Planned Parenthood and blocked environmental rules.
“The size of the cuts is a bit more than Democrats would like, but on the other hand, the riders are generally gone,” said Gary Jacobson, a political science professor at the University of California at San Diego. “So it’s something that might be generally popular and help both sides. Most Americans wanted some sort of compromise.”
Julian Zelizer, a professor of history and public affairs at Princeton University in New Jersey, said Obama may face questions about whether he engaged in the negotiations soon enough.
“All and all, this is something he survives rather than a negotiation that remakes how the electorate thinks about him,” Zelizer said.
While the president and legislators negotiated over a budget, markets showed little concern about the fiscal health of the U.S.
Bond yields are lower now than when the government was running a budget surplus a decade ago even as Treasury Department data show that the amount of marketable debt outstanding has risen to $9.13 trillion from $4.34 trillion in mid-2007.
The benchmark 10-year Treasury note yield was at 3.58 percent yesterday, below the average of 7 percent since 1980, reflecting the expectations that a deal would be reached, said John Lonski, chief economist at Moody’s Capital Markets Group.
Consumer confidence in the U.S. rose for a second consecutive week as an improving job market helped ease the burden of higher fuel costs. The Bloomberg Consumer Comfort Index climbed to minus 44.5 in the period ended April 3 from minus 46.9 the previous week.
Obama, 49, said the agreement rightly reflects “a debate about spending cuts, not social issues,” and is a budget that will be the start of the country “beginning to live within our means” by making significant spending cuts while preserving priorities such as education, energy development and medical research.
The president said some popular programs would be cut and infrastructure projects would be delayed.
“Some of the cuts we agreed to will be painful,” he said. “I would not have made these cuts in better circumstances.”
Obama and Republican Representative Paul Ryan of Wisconsin called the budget plan “good news” in their weekly addresses on the radio and Internet today.
“But much more has to be done to put our nation on a true path to prosperity,” said Ryan, who earlier this week presented a Republican budget plan for fiscal 2012 the would slice more than $6 trillion over the next decade out of Medicare, Medicaid, food stamps and scores of other programs.
“By removing the anchor of debt that weighs down our economy and advancing pro-growth tax reforms, this budget is a jobs budget,” Ryan said in his weekly address.
Set a Standard
Obama, in his address, said the spending agreement should set a standard for both parties.
“It’s my sincere hope that we can continue to come together as we face the many difficult challenges that lie ahead -- from creating jobs and growing our economy to educating our children and reducing our long-term deficits,” he said.
A series of late meetings and phone calls last night sealed the deal and capped a week of negotiations during which House Speaker John Boehner, an Ohio Republican, and Senate Majority Leader Harry Reid, a Nevada Democrat, made four trips to the White House to meet with Obama.
Administration officials said a breakthrough came during a meeting on the night of April 7, when attendees left the Oval Office in agreement on the broad outlines of a plan to cut spending by around $38 billion.
Still unsettled were Republican attempts to add so-called policy riders targeting federal aid to Planned Parenthood and environmental regulations. The administration drew a line at those provisions.
Reid said later that Vice President Joe Biden was angered that Republicans weren’t backing down on cutting Planned Parenthood funding, and he told them at one point, “Well, fine. Let the American people decide this issue then.”
Aides worked through the night and administration officials who briefed reporters after Obama spoke, said it was a phone call at 10:45 a.m. yesterday from Obama to Boehner that helped push the process along.
The officials, who spoke on condition of anonymity, said several proposals and counterproposals circulated among lawmakers and the administration throughout the day as members of Congress shuttled between press conferences and meetings.
Little was said at the White House, the administration officials said, on order from the president who wanted to give members of Congress time to sort out the differences.
At 10:30 p.m. Chief of Staff William Daley called the president in the residence to tell him that a deal had been reached. At 11:04 p.m., he addressed the public from the White House Blue Room, with the illuminated Washington Monument framed in a window behind him.
“Tomorrow, I’m pleased to announce that the Washington Monument, as well as the entire federal government, will be open for business,” the president said.
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