Senate leaders reached a Two-Year Budget Deal with huge goodies going to more military waste.

Congressional leaders said Wednesday they have reached an agreement on a two-year budget deal, charting a path out of the long-running turmoil over spending and immigration that culminated in a government shutdown last month.

The agreement raises federal spending by almost $300 billion over two years above limits imposed by a 2011 budget law. If approved by the GOP-controlled Congress, the deal would mark the triumph of defense hawks, who have pushed for higher military spending, over the dwindling number of conservatives focused on reducing the federal budget deficit.

The budget deal would raise military spending by $80 billion through the rest of fiscal year, which runs through September, and by $85 billion in fiscal year 2019, according to a congressional aide familiar with the agreement.

Congressional leaders also agreed to raise nondefense spending by $63 billion in this fiscal year and $68 billion the following year, according to the aide, addressing demands from Democrats, who had pushed for boosting domestic spending.

“After months of legislative logjams, this budget deal is a genuine breakthrough,” Senate Minority Leader Chuck Schumer (D., N..Y.) said on the Senate floor.

Will the Real Republicans Please Stand Up?

The real republicans cannot stand up for one simple reason: There aren't any and haven't been any for decades.

Perhaps "any" is too strong a word, perhaps not. It's easy for a few legislators to pretend to object when their votes are not the deciding ones.

Compromise in Washington has always been you give me goodies and I'll give you goodies, with the deficit forever soaring out of control.

Currency Crisis Coming Up

A currency crisis is baked in the cake.

When?

That's the tough question. The party can continue as long as other central banks in the world play along. There is no evidence of firm policy in Japan, China, the UK, or the EU.

Sure, QE is starting to roll back, until the next recession when QE and deficits expand universally. With so many countries playing along, a crisis can start anywhere.

Don't expect the dollar to blow up over deficits, because it won't until, like the VIX, it does. I still expect a currency crisis will hit elsewhere first.

Mike "Mish" Shedlock

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