How did a US Democratic president and a Republican Congress reach agreement on a five-year plan to balance the budget at a time of intense partisanship, mutual distrust, and suspicion? Daniel J. Palazzolo, a Congressional Fellow for Robert Ehrlich during the budget negotiations, tells the inside story from start to finish, describing the complex workings of policymaking, presidential-congressional relations, committee politics, and congressional leadership. Contrary to conventional assumptions that the American separation-of-powers system is destined to gridlock, Palazzolo argues that the system still works, even under divided government. The budget choices and deficit politics from 1980-1996 are analysed, the author aiming to set the 1997 Budget Agreement in realistic perspective.