Congressional leaders on Tuesday struck a deal to avert an election-year government shutdown showdown, agreeing on federal spending levels just days before both chambers adjourn for their month-long August recess.
Democrats and Republicans agreed to keep discretionary federal programs such as education, transportation and defense at current levels - an annual rate of $1.05 trillion - through March 2013. Such a timeline prevents the budget issue from becoming enmeshed in this fall's presidential and congressional elections.
It is unclear when the deal would be voted on by the House and Senate, but it must be approved by Sept. 30, when the current fiscal year ends.
In 2011, Republicans pushed hard for deep spending cuts, which triggered somewhat of a voter backlash and turmoil in the financial markets. While this deal would avoid a re-run of that situation, it puts Republicans in a prime position to make more spending cuts if they win congressional seats, or the White House, this fall.
The timing of the agreement also means a lame-duck Congress won't be making such spending decisions.
Senate Majority Leader Harry Reid, D-Nev., praised the three-way agreement between the Senate, the House and the White House.
"(The agreement) provides stability for the coming months, when we will have to resolve critical issues that directly affect middle class families," Reid said Tuesday afternoon.
Senate Majority Whip Dick Durbin, D-Ill., described the agreement to CNN as "very basic, without bells and whistles, to maintain the operations of government. I think it's the right thing to do."
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June 12, 2026 17:14 ET Major central bank action was the focus this week in economic news. The European Central Bank became the first major central bank to move in response to the rising inflationary pressures in the backdrop of the conflict in the Middle East. In North America, the U.S. inflation and trade data as well as Canada’s central bank decision gained attention. The Chinese trade data was the main news in Asia.