Parties at odds over deal to avert government shutdown

WASHINGTON Sun Apr 3, 2011 2:53pm EDT

Senator Harry Reid (D-NV) talks about the possibility of a government shutdown over a budget impasse and U.S. military action in Libya on ''Face the Nation'' April 3, 2011. REUTERS/Chris Usher/Handout

Senator Harry Reid (D-NV) talks about the possibility of a government shutdown over a budget impasse and U.S. military action in Libya on ''Face the Nation'' April 3, 2011.

Credit: Reuters/Chris Usher/Handout

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WASHINGTON (Reuters) - Lawmakers clashed on Sunday over where to slash spending to avoid next week's potential government shutdown and over the Republicans' 2012 budget plan to cut more than $4 trillion over the next decade.

The main author of the Republican proposal, expected to be unveiled on Tuesday, said it would cap spending, lower corporate tax rates and change the federal Medicare and Medicaid health programs for the retired and the poor.

Democrats immediately criticized that effort, saying it extended tax breaks to millionaires and big oil companies and cut health programs for seniors. They predicted an even bigger political battle than the fight over this year's budget that threatens a government shutdown.

For the rest of this year, Republicans and Democrats have tentatively agreed to $33 billion in spending cuts, which would be the largest domestic spending reduction in U.S. history. But lawmakers said they have yet to reach a deal on exactly what programs will be cut and by how much.

The government runs out of cash when a short-term funding measure expires on April 8. President Barack Obama told congressional leaders on Saturday that time was running short to agree on a deal to avoid a shutdown that would undermine economic growth.

Neither party wants to cause a government shutdown that could lead to thousands of layoffs when voters are already nervous about the shaky economic recovery and rising gas prices brought on by political unrest in the Middle East.

Several lawmakers said on televised Sunday talk shows they believed a shutdown could still be averted.

"We've agreed on a number. Let's work to get that number done," Senate Majority Leader Harry Reid said on CBS's "Face the Nation" program, blaming the conservative Tea Party movement for standing in the way of a deal.

"The Republican leadership in the House has to make a decision: whether it will do the right thing for the country or do the right thing for the Tea Party," Reid said.

Senator Jeff Sessions, the top Republican on the budget committee, said he believes a deal could be reached but said Democrats are punting on the hard decisions.

"This is more than a Republican-Democratic squabble. The fundamental question is, are we headed to a financial crisis if we don't get off the fiscal course we are on?," Sessions said on ABC's "This Week."

Senate Democratic Leader Dick Durbin said he would oppose any Republican effort to cut government spending this year for environmental regulation or birth control, so-called policy riders some Republicans want to add to a short-term deal.

"Some of the spending cuts suggested go way, way too far," Durbin said on NBC's "Meet the Press."

REPUBLICAN PLAN BOLDER THAN DEFICIT COMMISSION

Representative Paul Ryan, the main author of the Republican 2012 budget plan in an interview on "Fox News Sunday," said it will cut the deficit by more than $4 trillion over 10 years and will exceed a presidential deficit commission's goals.

"We're looking at more than that right now," Ryan, chairman of the House of Representatives Budget Committee, said. "We're fine tuning our numbers with the Congressional Budget Office literally today ... but we're going to be cutting a lot more than that."

But Durbin, who is working with a small group of bipartisan senators on ways to cut the deficit, said he had problems with Ryan's proposals.

"We'll come at it differently," he said, citing Pentagon cuts and requiring the wealthiest Americans to pay more in taxes rather than deep cuts in government social programs.

The deficit commission late last year backed a series of bold proposals to cut the deficit by $4 trillion over a decade by trimming tax breaks, raising the retirement age for Social Security and other politically unpopular proposals.

Ryan, a Republican from Wisconsin, said his plan would put caps on discretionary spending over the next five years.

He said his proposal would also tackle Medicare and Medicaid programs for the retired and the poor, though the changes would not impact anyone already over retirement age.

Congressional Democrats who saw Republicans punished by voters after a 1995 shutdown when Democrat Bill Clinton was president are eager to place the blame on Republicans once again. The budget battles have become a major political issue ahead of the 2012 elections.

(Editing by Deborah Charles and Eric Walsh)

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