February 26, 2011 / 3:48 PM / 9 years ago

UPDATE 1-Obama urges Congress to avoid US budget gridlock

* Obama urges lawmakers to avoid government shutdown

* Republicans blame Obama, Democrats for blocking cuts

* Republicans offer short-term spending compromise

(Adds background)

By Alister Bull

WASHINGTON, Feb 26 (Reuters) - U.S. President Barack Obama on Saturday urged Congress to find “common ground” to prevent a damaging government shutdown, as Republicans and Democrats edged toward a compromise to keep federal money flowing.

“Next week, Congress will focus on a short-term budget. For the sake of our people and our economy, we cannot allow gridlock to prevail,” Obama said in his weekly radio address.

Republicans in the House of Representatives on Friday detailed some $4 billion in spending cuts for a two-week stopgap spending bill, which the leader of the Democratic-controlled Senate indicated could be acceptable.

That would buy time for Congress to try to work out a plan to fund the government through the rest of this fiscal year that ends on Sept. 30.

“We are encouraged to hear that Republicans are abandoning their demands for extreme measures ... and instead moving closer to Democrats’ position that we should cut government spending in a smart, responsible way that targets waste and excess while keeping our economy growing,” Jon Summers, spokesman for Senate Majority leader Harry Reid, said in a statement on Friday.

Republicans and Obama’s Democrats are scrapping over federal spending, with Republicans saying their big wins in November elections empower them to demand major cuts and Democrats contending that would imperil the fragile economic recovery.

The parties must agree to a stopgap measure next week to keep funding the government, or on March 4 it will run out of cash and nonessential services will be halted.

“I urge and expect them to find common ground so we can accelerate, not impede, economic growth,” Obama said.

“It won’t be easy. There will be plenty of debates and disagreements and neither party will get everything it wants. Both sides will have to compromise,” he added.


The stopgap measure House Republicans proposed would continue funding for two weeks for all programs except for some that already had been targeted for cuts in Obama’s recent budget plan for fiscal 2012, which begins on Oct. 1.

It also would eliminate funding that had been earmarked for lawmakers’ pet projects for this year. Those include $293 million for transportation projects and $173 million for economic development projects.

The Republican-led House earlier this month passed a measure that would slash $61 billion through September from domestic programs, excluding the Social Security pension program and the Medicare and Medicaid health programs for the elderly and poor.

Senate Democrats said that would gut many social and environmental programs and called it a non-starter. Investment firm Goldman Sachs estimated the bill would significantly slow U.S. economic growth in the second and third quarters.

Neither party wants to get blamed for a government shutdown that could slow the payment of benefits to millions of Americans and see thousands of federal workers laid off.

But newly elected Republican lawmakers — backed by a conservative Tea Party movement energized by popular anger over federal spending — are pushing to shrink the government.

The U.S. budget deficit is forecast to reach a record $1.65 trillion this year, or almost 11 percent of U.S. output, under a budget for fiscal 2012 that Obama proposed earlier this month to Congress.

The president said he supports a “balanced” approach to deficit reduction that does not ditch long-term investment in education and infrastructure.

“I look forward to working with members of both parties to produce a responsible budget that cuts what we can’t afford, sharpens America’s competitive edge in the world and helps us win the future,” Obama said.

Republicans said they had no interest in shutting down the government, but would insist on a prudent funding.

“Our goal as Republicans is to make sensible reductions in this spending and create a better environment for job growth, not to shut down the government,” Senator Rob Portman said in his party’s weekly address. (Editing by Vicki Allen and Jackie Frank)

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