The budget accord calls for the budget to be balanced within seven years.

Why does the Fed chairman support the budget accord?

The major obstacle to a budget accord is now the last of four tax cuts approved by the Legislature in 1987.

While widely acclaimed, the program would lose the final 200 of its 5,000 slots under the budget accord.

Together, these agreements represent significant steps toward a full budget accord.

In the credit markets, the budget accord, which some analysts said had been expected, was played down as "just a starting point."

Brokers there said the budget accord in Washington did not heighten confidence as some had expected.

Those partners, he predicted, are not likely to be reassured on the budget accord "until it becomes law."

"If they cut rates on a budget accord, it is likely to be a token move," he said.

Under the 1990 budget accord, annual military spending must fall by about $25 billion over the next two years.