The US Congress budget committee has reached an agreement to fund federal services, after October government shutdown.
The proposed deal finances the government for two years and reduces the federal deficit by $23 billion.
It also avoids another government shutdown on January 15, 2014, when government funding is scheduled to run out.
The new deal “cuts spending in a smarter way,” Republican Congressman Paul Ryan said on Tuesday.
The budget deal also offsets $63 billion in previously enacted automatic military and domestic spending cuts triggered in January when Democrats and Republicans failed to reach a budget compromise.
Paul Ryan and Democratic Senator Patty Murray, the respective chairs of the House and Senate budget committees, were called on to reach a cross-party budget deal in the wake of October’s partial government shutdown over federal spending.
“We have broken through the partisanship and gridlock,” Patty Murray said of the new deal.
Paul Ryan said he was optimistic the new budget agreement could pass both sides of the highly politically divided Congress.
The measure is expected to come to a vote before the House recesses for several weeks beginning on Friday.
According to the Congressional budget chairs, the new deal does not raise taxes but requires newly hired federal workers to make larger contributions to their pensions.
A federal airport security fee adding $5 to the cost of a typical return flight is also included.
Following the announcement on Tuesday, Republican House Speaker John Boehner called the “modest” cross-party deal a “positive step forward”.
President Barack Obama issued a written statement labeling the agreement “balanced” and “designed in a way that doesn’t hurt our economy”.
“This agreement doesn’t include everything I’d like – and I know many Republicans feel the same way. That’s the nature of compromise,” he said.
But, “because it’s the first budget that leaders of both parties have agreed to in a few years, the American people should not have to endure the pain of another government shutdown for the next two years,” the president added.
Government officials say the deal, totalling an estimated $85 billion over the next decade, aims to carve $20 billion out of the nation’s $17 trillion debt.
The deal is expected to pass both houses of Congress, despite attempts by Conservative groups to persuade Republicans to oppose it.