UPDATE 3-Without drama, U.S. Congress passes spending bill

Thu Nov 17, 2011 7:37pm EST

* Congress avoids brinkmanship this time

* Raises loan limits, squeezes CFTC

By Andy Sullivan

WASHINGTON, Nov 17 (Reuters) - The U.S. Congress on Thursday found a rare moment of accord in the budget fights that have paralyzed Washington this year as lawmakers voted to extend government funding through December.

The Democratic-controlled Senate by a vote of 70 to 30 passed a bill that would allow the government to keep running when current funding expires on Saturday and sent it to President Barack Obama to sign into law.

The Republican-controlled House of Representatives had approved the bill by a vote of 298 to 121 earlier in the day.

Though 101 House Republicans voted against the bill, the debate lacked the drama of other spending battles this year that have shaken consumer confidence and led to a first-ever debt downgrade.

Congress's most basic task is to oversee the federal purse strings, yet lawmakers took the government to the brink of a shutdown in April and the edge of default in August. Another round of brinkmanship ensued in September over what is normally a routine vote to extend funding.

This time, lawmakers who oversee more than $1 trillion in discretionary spending resolved their differences in an orderly manner.

"It's like a breath of fresh air has blown through this chamber," said Republican Representative Steven LaTourette. "This wasn't a my-way-or-the-highway negotiation."

Republicans have pushed for steep spending cuts to rein in the federal government and slow the growth of the $15 trillion debt, while Democrats have warned that cutbacks could hurt those struggling to make ends meet in a shaky economy.

After a bruising fight to extend the government's borrowing authority in the summer, Republicans agreed to a spending cap of $1.043 trillion, only $6 billion below last year. That figure does not include spending on benefit programs that are outside the reach of the yearly budget cycle.

REDUCED SPENDING FOR TWO YEARS IN A ROW

Congress is now on track to reduce discretionary spending for the second year in a row after a decade of steady increases.

"This bill is the next step in breaking the status quo of excessive federal spending that is throwing our budgets out of whack," said Representative Hal Rogers, who oversees spending as chairman of the Appropriations Committee.

Democrats managed to restore funds to food stamps, housing subsidies for the poor and other programs that had been targeted by Republicans.

The bill sets new funding levels for a wide range of government activities, from law enforcement to public housing to space exploration, for the fiscal year that started on Oct. 1. Congress is supposed to pass its spending bills by that date each year but rarely manages to do so.

Other programs not covered by the bill, from financial regulation to the Pentagon, are funded at last year's levels through Dec. 16. Lawmakers hope to resolve their differences on the remaining programs by then.

The bill is not without its flash points.

It would increase the maximum size of mortgage loans that can be insured by the Federal Housing Administration, over the objections of conservatives who want to scale back the government's role in the mortgage markets.

The Commodity Futures Trading Commission was denied the big budget boost that the White House had requested as it puts in place financial reforms and investigates bankrupt brokerage MF Global.

Democratic Representative Barney Frank warned that inadequate funding could lead to a repetition of the 2008 financial crisis.

The bill also restricts the Agriculture Department from requiring schools to serve more fresh fruits, vegetables and whole grains as part of an effort to fight obesity. Republicans said that would have cost $7 billion more over five years.

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