Congress Fights Clock to Reach Spending Deal to Avert Government Shutdown

Lawmakers trying to reach a 2011 spending compromise have made “some progress,” the House’s top Republican said, though time is running short to avert a U.S. government shutdown threatened for week’s end.

President Barack Obama invited Republican House Speaker John Boehner and Senate Majority Leader Harry Reid, a Nevada Democrat, to meet with him and Vice President Joe Biden on the budget tonight at the White House.

Prior meetings have yet to yield a breakthrough, even as Obama said it would be “inexcusable” for Congress to fall short of an accord and allow federal agencies to be closed for the first time in 15 years.

Boehner of Ohio said that while the talks are advancing, he’s still pushing for deeper spending cuts than Democrats favor and for environmental and other policy directives backed by his party.

“I think we’ve made some progress, yes,” Boehner said after meeting with all House Republicans and a telephone call this morning from Obama. “But we are not finished, not by a long shot.”

Current government spending authority is scheduled to expire April 8. Without an agreement, all non-essential government functions would close.

Congressional officials negotiated privately as leaders publicly feuded over proposed spending cuts and the policy directives, and the administration and Congress prepared for a shutdown.

‘Moving Toward Closure’

A leading Senate Democrat said he was more optimistic than earlier in the week that an accord could be reached.

“I feel better today than I did yesterday,” said Senator Dick Durbin of Illinois, the chamber’s second-ranking Democrat. “There’s a direct negotiation. There have been things put on the table that had not been discussed before, and I think that we’re moving toward closure.”

House Republican leaders say they will move through the chamber tomorrow a temporary funding measure that would keep the government operating through April 15, impose $12 billion in budget cuts and fund the Pentagon for the remainder of the year. Senate Democratic leaders have said they oppose the bill, meaning it may end up being a symbolic measure.

$40 Billion

Boehner told Democrats yesterday at a private White House meeting that he might be able to agree to a plan that sliced $40 billion from current spending, according to an administration official who sought anonymity. That is $7 billion higher than the $33 billion plan lawmakers had been working to assemble.

A spokesman for Boehner, Michael Steel, declined to confirm whether the speaker had raised such a proposal.

Many of the House’s Tea Party-backed freshmen are beginning to soften their opposition to compromising on funding levels for the rest of this fiscal year, said Representative Mike Rogers, an Alabama Republican.

“You can really see this week a lot of the freshmen evolving and growing” and “maturing,” he said. “There’s three levers that make laws; we just have one of the three. That’s just the way it is. The Senate’s got one, the president’s got one -- they’re starting to get it.”

IRS Audits

The Obama administration said it is preparing for a partial shutdown of operations if Congress doesn’t act, which would suspend Internal Revenue Service audits and federal small- business loan processing, as well as government guarantees of some mortgages, according to an official who briefed reporters on condition of anonymity.

Congress, too, was bracing for a shutdown. Officials have told lawmakers and senior aides to designate which employees are “essential” and must report to work, and said those deemed non-essential will be furloughed without pay. It’s up to Congress to decide whether they will be compensated for the forced time off, as they have been during past shutdowns.

“It is unknown whether legislation will ultimately be passed in this circumstance to provide back pay for the period of furlough and you should plan accordingly,” said a sample letter to non-essential employees posted on the Committee on House Administration’s website. “We wish that we could provide you with more guidance on this issue but, due to the fluid nature of the situation, we cannot.”

‘No Excuse’

Obama, wading into the talks after weeks on the sidelines, said yesterday that Democrats have offered cuts to the proposed 2011 budget that should meet Republicans’ demands, and that the nation can’t afford a government shutdown if an accord isn’t reached by the end of the week.

“We are now at a point where there’s no excuse to extend this further,” the president told reporters at the White House after he had hosted the meeting with congressional leaders.

Today in Fairless Hills, Pennsylvania, Obama said the stalemate threatens the U.S. economic recovery just as it is gaining momentum.

“Companies don’t like uncertainty, and if they start seeing that suddenly we may have a shutdown of our government, that could halt momentum right when we need to build it up,” Obama said. “I do not want to see Washington politics stand in the way of America’s progress.”

2012 Budget

The showdown over this year’s spending persisted as House Republicans discussed their budget proposal for the 2012 fiscal year that would cut the deficit in coming years by about three- quarters, with a $6 trillion reduction in spending and a 25 percent cap on tax rates. The proposal by Budget Committee Chairman Paul Ryan of Wisconsin would trim the deficit next year to $995 billion from about $1.4 trillion now.

The plan’s scope dwarfs what lawmakers are arguing over now, a spending measure to fund the government through the 2011 fiscal year, which ends Sept. 30.

Complicating the debate over the 2011 budget is the dispute over dozens of so-called policy riders House Republicans tacked onto their 2011 spending plan that seek to limit the Obama administration’s prerogatives for environmental rules, health care and abortion, among other matters. Republicans have said they will only agree to strip some of the directives from a budget deal in return for deeper spending cuts.

“I thought this was about deficits rather than policy, and unfortunately policy issues are still on the table,” Durbin said. “I hope he doesn’t go too far,” he said, referring to Boehner.

To contact the reporters on this story: Julie Hirschfeld Davis in Washington at jdavis159@bloomberg.net; Julianna Goldman in Washington at jgoldman6@bloomberg.net

To contact the editor responsible for this story: Mark Silva at msilva34@bloomberg.net

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