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Obama, Congress make budget deal, avert shutdown

Washington, April 9, 2011

US President Barack Obama and congressional leaders struck a last-minute budget deal on Friday, narrowly averting a government shutdown that would have idled hundreds of thousands of federal workers.

With little time to spare before a midnight deadline for a government closure, Obama's Democrats and opposition Republicans agreed to a bitterly fought compromise plan that would cut $37.8 billion in spending for the rest of the fiscal year.

Congress moved quickly to approve a seven-day stopgap funding measure to keep federal agencies running into next week until the budget agreement can be formally enacted.

A shutdown -- the first in more than 15 years -- would have meant furloughs for much of the federal work force, suspension of key government services and the closing of many national parks and monuments, while potentially undermining the US economic recovery.

But the biggest incentive for a deal may have been the risks that failure would have posed for Obama, his fellow Democrats and the Republicans amid signs of public frustration with the rancorous budget fight in Washington as the 2012 presidential election campaign gathers steam.

"Tomorrow, I'm pleased to announce that the Washington Monument as well as the entire federal government will be open for business," Obama said in a late-night appearance at the White House.

The deal for the rest of the fiscal year, which came after days of tense negotiations and brinkmanship, will yield the largest domestic spending cuts in US history, an achievement for Republicans who won control of the House of Representatives last November on a promise to scale back government.

But Obama and the Democrats can take solace in having beat back a Republican effort to block birth control funding to the Planned Parenthood family planning organization, because it also provides abortions -- though not with public money.

Despite the resolution, the political fight raised questions about the ability of Obama and a divided US Congress to deal with bigger issues looming down the road, from raising the federal debt ceiling to reining in budget deficits.

Investment firm Goldman Sachs had estimated a government shutdown lasting more than a week could have cost the economy $8 billion in missed federal spending, dragging down growth.   
"Like any worthwhile compromise, both sides had to make tough decisions and give ground on issues that were important to them," Obama said. "Some of the cuts we agreed to will be painful."

US House of Representatives Speaker John Boehner told reporters the sides had come to "an agreement that will in fact cut spending and keep our government open."

Obama's aides and US lawmakers had struggled for days to hammer out a deal. Without an agreement, money to operate the federal government for the next six months would have run out at midnight on Friday and agencies such as the Internal Revenue Service would begin a partial shutdown.

The leadership of the world's lone remaining superpower has been consumed for days by the budgetary infighting that could bring large swathes of government to a standstill.

"They've got to be laughing at us right now" in China, said Senate Foreign Relations Committee Chairman John Kerry. "How terrific that the United States of America can't make a decision."

White House Budget Director Jack Lew said Obama was expected to sign the stopgap measure no later than Saturday and told federal agencies to continue their normal operations. – Reuters




Tags: Budget | Congress | Obama | Washington | Shutdown |

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