WASHINGTON (AP) — Congress is on the verge of doingsomething it hasn’t done during three years of
partisan warfare: Passinga budget deal that won’t likely hurt the economy.The two-yearspending plan the
Senate is expected to approve Wednesday all butremoves the threat of another government shutdown like the
one thatslowed the economy in October. Among other things, the agreement willroll back some of the automatic
federal spending cuts that kicked inthis year.The result? Economists say the U.S. economy has a goodchance
to accelerate at its fastest pace since before the GreatRecession struck six years ago.Growth has plodded
along at a 2.4percent annual rate so far this year. Bolstered in part by the budgetdeal, the economy is
poised to expand 2.9 percent next year, itshealthiest pace since 2005, according to an Associated Press
survey ofeconomists."There was a lot of austerity in 2013," said MichaelHanson, senior U.S.
economist at Bank of America. "We should have a lotless in 2014."President Barack Obama is
expected to sign thebipartisan compromise. The measure overwhelmingly cleared the House lastweek. On
Tuesday, the Senate advanced the bill in a procedural vote,setting the stage for final passage.The deal
marks a sharp changefrom recent years in which partisan hostilities led to governance bycrisis. Deals were
struck between Democrats and Republicans only as thegovernment neared an emergency. A last-minute deal in
October, forexample, removed the threat of a default on the national debt that couldhave triggered another
recession.The earlier budget deals helpedshrink the deficit. But they’ve also squeezed workers and
businesses byhindering growth. Higher tax rates, along with spending cuts,subtracted 1.5 percentage points
from annual growth this year, accordingto the Congressional Budget Office. That’s the difference between
aneconomy limping along at 2.4 percent annual growth and one acceleratingat close to a 4 percent rate.With
the new deal in place,economists estimate that the government will exert less of a drag on theeconomy. The
drag on growth from federal policies should decline from1.5 percentage points this year to 0.5 percentage
point at the most,economists estimate.The bill approves spending in 2014 atslightly more than $1 trillion,
compared with the $967 billion mandatedby the automatic spending cuts. It boosts spending by $63 billion
overtwo years.It replaces the spending cuts with longer-term savings,many of which don’t accumulate for
nearly another decade. Airlinepassengers will pay higher ticket fees, but the additional revenue won’tcome
from tax increases. Deficits would rise slightly in 2014 and 2015.Thecompromise could also spur businesses
to hire and expand becausethey’re no longer operating under the threat of another governmentshutdown. It
also suggests that a compromise will be reached whenCongress must again raise the debt limit in February to
prevent apossible default. Just the appearance of two nearly implacable politicalparties agreeing on the
first bipartisan budget pact since 1986 hasincreased hope."More significant is that there is a deal at
all,as that should eliminate the risk of another shutdown," said JimO’Sullivan, chief U.S. economist at
High Frequency Economics, whoforecasts that the economy will grow 3.3 percent next year largely as aresult
of less drag from the government.The agreement could alsomake it easier for the Federal Reserve to scale
back its purchases of$85 billion in bonds each month. The Fed program has been intended tolower loan rates
to boost borrowing, spending and investing. But even ashiring has picked up, Chairman Ben Bernanke has been
reluctant to slowthe purchases until Congress settled its differences on the budget.Economistssaid the
additional spending from repealing some of the spending cutsshould help growth. But some of the gains could
be offset by the end ofemergency unemployment benefits on Dec. 28. The federal program hasextended benefits
to 1.3 million people who’ve been out of work longerthan six months. The program’s expiration could hurt
because thebeneficiaries will have less money to spend on food, housing, clothesand transportation.But on
the whole, the budget deal is viewed as a net positive for the economy."Forthe first time in recent
years in Washington, D.C., lunacy has givenway to a baby step back towards sanity," said David Kotok,
chairman ofCumberland Advisors, in a client note.Copyright 2013 The Associated Press. All rightsreserved.
This material may not be published, broadcast, rewritten orredistributed.