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WRAPUP 3-US Congress averts shutdown, sends stopgap to Obama
March 2, 2011 / 5:36 PM / 7 years ago

WRAPUP 3-US Congress averts shutdown, sends stopgap to Obama

* Action only delays reckoning on budget

* $55 billion gap between Senate, House plans

* Poll finds many wouldn’t mind government shutdown (New throughout with Democratic spending plan)

By Andy Sullivan

WASHINGTON, March 2 (Reuters) - A partisan divide over the U.S. budget hardened on Wednesday even as Congress sent President Barack Obama a stopgap spending bill that averts an imminent government shutdown.

With government funding due to run out on Friday, lawmakers sent Obama a bill that buys them two more weeks to wrestle over funding levels for the fiscal year that lasts through September. Obama promptly signed it into law.

The stopgap bill passed both the Democratic-controlled Senate and the Republican-controlled House of Representatives by wide margins, but party leaders showed little inclination to bridge a $55 billion gap between their two proposals.

House Republicans have passed a spending plan that would impose immediate cuts of 25 percent on domestic operations. Senate Democrats are readying a proposal that would essentially keep spending at current levels after factoring in $4 billion in noncontroversial cuts that were included in the stopgap spending bill, according to an aide.

Obama, who has so far remained relatively aloof from a budget debate that has consumed Capitol Hill for months, named Vice President Joe Biden to lead negotiations between the two chambers.

He will have his work cut out for him.

Democratic Senator Charles Schumer called the Republican plan a “nonstarter” while House Speaker John Boehner suggested the Senate will have to pass its bill first before talks can begin.

“The House position is perfectly clear. We have no clue where our colleagues on the Senate side are,” Boehner said.

Republicans have made spending cuts their top priority since Tea Party-aligned conservatives handed them control of the House last November, and it is unclear how much those newly elected lawmakers will be willing to compromise.

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TAKE A LOOK-Fight over US budget, deficits[ID:nN11152338]

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That means Congress will likely return to its game of brinkmanship when the temporary bill expires in two weeks, even as lawmakers begin work on next year’s budget, consider reform of tax laws and the massive government healthcare and pension programs, and gird for an unpleasant vote to raise the government’s borrowing authority.

“We cannot keep doing business this way,” Obama said in a statement. “Living with the threat of a shutdown every few weeks is not responsible, and it puts our economic progress in jeopardy.”

With the fiscal year approaching its halfway point, the government continues on a temporary extension of last year’s budget due to Congress’s ability to pass a budget.

UNWANTED ROCKETS, UNPURCHASED DRONES

That has led to millions of dollars in waste as agencies have been unable to end unwanted programs or launch new initiatives. NASA continues work on a rocket it does not want, while the Pentagon has been unable to buy new unmanned drones needed in Afghanistan.

Both parties acknowledge the need to tame a budget deficit that is projected to hit a record $1.65 trillion this year, equal to 10.9 percent of the economy, but Democrats warn that slashing spending too quickly will endanger the shaky economic recovery.

Federal Reserve Chairman Ben Bernanke said the Republican plan would not hurt the economy as much as some Wall Street analysts predict, estimating it could cost around 200,000 jobs at a time when unemployment is at 9 percent but would not cause a big dent in economic growth. [ID:nN02253988]

The spending debate has concentrated on domestic programs that account for only 13 percent of the $3.7 trillion federal budget. That would do nothing to rein in benefit programs like Medicare that lie beyond the reach of the yearly budget process and are expected to widen deficits in years to come.

Resolving the long-term budget imbalance will require some combination of spending caps, tax increases and entitlement reform, Goldman Sachs said in a research note.

Leaders from both parties have said they do not want to shut down the government, which would furlough hundreds of thousands of federal workers, close national parks and bankruptcy courts and other “nonessential” services.

Voters largely blamed the Republicans for the last series of budget-related shutdowns in 1995 and 1996, but recent polls suggest that neither party would emerge a clear winner this time -- or that the public would even mind that much.

A Quinnipiac University poll found 46 percent of voters believed a government shutdown would be a good thing, while 44 percent thought it would be bad. Most Democratic voters opposed a shutdown and most Republicans favor it, the poll found. (Additional reporting by Kim Dixon, Alister Bull, Thomas Ferraro and Richard Cowan; Editing by Jackie Frank)

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