The agreement, struck between the White House and Congress in a bipartisan fashion Monday, covers fiscal years 2020 and 2021, and would raise overall spending levels by USD 320 billion above the strict limits set in 2011, Xinhua reported on Friday.
It would also suspend the federal debt ceiling until July 31, 2021, preventing the US from defaulting on its payment obligations. The Treasury Department has estimated that a potential default could have happened as soon as early September.
The passage of the Bipartisan Budget Act of 2019 in the House by a vote of 284-149 came one day before lawmakers in the chamber leaves town for the summer recess.
The Senate's recess starts on August 2, giving the upper chamber additional time to vote on the measure. If passed by the Senate, the proposed bill will be sent to President Donald Trump's desk for a signature.
US President Donald Trump tweeted earlier in the day urging House Republicans to support the deal, which is not yet a law until the president signs on it. Trump applauded the agreement, saying it "greatly helps our Military and our Vets."
Representing a significant bipartisan compromise, the bill will see the budget cap for discretionary spending rise to USD 1.37 trillion in 2020 and USD 1.375 trillion in 2021. It includes parity between increases in defense spending and domestic, non-defense outlays, a priority for House Speaker Nancy Pelosi, a California Democrat.
While Democrats managed to clinch USD 77.4 billion in "offsets" for spending increases down from the original White House proposal asking for USD 150 billion Republicans can boast the victory of securing more defense spending in the agreement USD 738 billion in 2020 and USD 741 billion in 2021.
Meanwhile, the USD 320-billion rise in overall spending levels for the next two years is USD 30 billion less than what the Democrats have sought.
Non-defense spending for fiscal 2020 would total USD 632 billion, up nearly 4.5 per cent above the comparable fiscal 2019 numbers. For 2021, spending in domestic programs would be further boosted to USD 635 billion.
In addition, the legislation would avoid the automatic cuts looming in January that would have reduced USD 55 billion in domestic spending and shrank military spending by USD 71 billion compared with 2019 levels.
The automatic across-the-board cuts, known as "sequester," were established in the Budget Control Act of 2011. It intends to cut spending for federal agencies totalling USD 1.2 trillion during the decade ending 2021, when the law is set to expire.
With the spending levels being raised, the agreement would permanently end the sequester, a move hailed by Pelosi and Schumer in a joint statement Monday as an important win for Democrats.
"Importantly, Democrats have achieved an agreement that permanently ends the threat of the sequester," they said. "We are pleased that the Administration has finally agreed to join Democrats in ending these devastating cuts."
( With inputs from IANS )