Shutdown threat recedes as budget deal emerges

WASHINGTON Wed Mar 30, 2011 5:53pm EDT

Senate Majority Leader Harry Reid (D-NV) listens to a question from a reporter during a news conference in Las Vegas, Nevada November 3, 2010. REUTERS/Las Vegas Sun/Steve Marcus

Senate Majority Leader Harry Reid (D-NV) listens to a question from a reporter during a news conference in Las Vegas, Nevada November 3, 2010.

Credit: Reuters/Las Vegas Sun/Steve Marcus

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WASHINGTON (Reuters) - The threat of a U.S. government shutdown receded on Wednesday as Republicans and Democrats in Congress began crafting a budget that could impose the largest domestic spending cut in history.

Though lawmakers continued to trade jabs in public, staffers from both parties began filling in the blanks on a possible agreement that would cut roughly $33 billion from the current fiscal year, aides said.

That would be a victory for Republicans, who took control of the House of Representatives last fall on a promise to slash spending and scale back the reach of government amid worries about the nation's worsening fiscal situation.

It also would avoid a messy government shutdown when a stopgap funding measure expires on April 8.

Many details remain up in the air, aides cautioned, as the final figure depends on which of dozens of Republican-backed funding restrictions will be included in the final product.

"There's no agreement, and nothing will be agreed to until everything is agreed to," said Michael Steel, a spokesman for House Speaker John Boehner.

Because the fiscal year is already half over, a cut of $33 billion would mean severe pain for many domestic agencies, it would do little to plug a budget deficit that is projected to hit $1.4 trillion this year.

Both parties acknowledge the need to trim budget deficits that have hovered around 10 percent of GDP in recent years, but differ on how quickly spending should be reduced, and whether taxes should be raised and benefits like Social Security should also be trimmed.

ANSWER 'IN THE MIDDLE'

While Republicans have passed a spending bill through the House that would slice $61 billion from the current budget, Democrats warn that cuts of that magnitude would hurt the fragile economy.

"We know the answer lies in the middle. Neither party can pass a budget without the other party," Senate Democratic Leader Harry Reid said.

The measure has to pass both the Republican-controlled House and the Democratic-controlled Senate. Boehner, in particular, faces a tricky balancing act as he faces pressure from conservatives aligned with the Tea Party movement who have little appetite for compromise.

Tea Party groups plan a Thursday rally at the Capitol.

The negotiations are complicated by the dozens of Republican-backed funding restrictions that would prevent President Barack Obama from enacting top priorities like greenhouse gas regulation and healthcare reform.

Budget-writing staffers on the House and Senate appropriations committees are sorting through the less controversial restrictions, with the assumption that some of them will be included in a final bill, aides said.

The two sides have yet to sort out the more sweeping provisions, which have drawn a veto threat from Obama.

Reid and other Democratic leaders were expected to meet with Vice President Joe Biden and other White House officials in the Capitol later in the evening.

House Republicans are expected next week to unveil a budget proposal for the coming fiscal year, starting on October 1, that would combine more spending cuts with cuts to benefit programs like Medicare that account for more than half of the $3.7 trillion budget.

(Editing by Cynthia Osterman)

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Comments (5)
ForGondor wrote:
If there isn’t a serious look at that report that noted dozens
of programs that do a similar services to this country at varying effectiveness and cost, and we cannot do the research that is truly needed to make the cuts thatare a responsible way of cutting overhead without damaging thethe services our country does, let the government shut down. Put the legislature and their staff to work without pay.
Let the President and the White House work without a penny, but
you can’t threaten people who work in the Postal Service, FBI,
IRS, and other essential government employees with no pay. They
go to work and pay their taxes just like everyone else, and
aren’t the problem. If we refuse to make our congresspersons,
executive officers, and members of the judicial branch do the hard
job of democracy, then we are only hurting the American people.
We need more time to find the holes, and really rethink the
need for tax cuts and IRS loopholes. The issue is not that we are
spending, but we refuse to take the social responsibility of the
wealth we make at the advantage of not only the people in this country
but the people in China who work at a fraction of what it costs
an American to work. Everyone deserves a reasonable wage, even those
in a totalitarian country. Wake up, America. I’m ready for my
responsibility as long as I have the freedom and equality that
everyone deserves.

Mar 30, 2011 3:32pm EDT  --  Report as abuse
ajmg1 wrote:
Stopping pay to the president and congress would be no incentive to pass legislation. Remember a congressman gets his/her pay and all they can steal from the tax payer. The latter being much greater than the former.

Mar 30, 2011 3:37pm EDT  --  Report as abuse
bck555 wrote:
Unless the $105 Billion for Obamacare appropriated last year is removed, then NO DEALS! Draw the line and don’t cross it!

Mar 30, 2011 7:18pm EDT  --  Report as abuse
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