Prospect of U.S. government shutdown eases
Wednesday, February 23, 2011
Prospect of U.S. government shutdown eases
By Richard Cowan and Alister Bull, Reuters
The risk of a U.S. government shutdown eased on Tuesday after a
top Republican backed a stopgap measure to keep programs funded
beyond March 4.
The White House also expressed confidence that the two parties can
agree to keep the government going and avoid a political standoff
that could unsettle financial markets and risk mass government
layoffs.
House of Representatives Speaker John Boehner said his chamber
"will pass a short-term bill to keep the government running -- one
that also cuts spending," if the Democratic-led Senate refused to
vote on a tough spending-cut bill that passed the House on
Saturday.
President Barack Obama's Democrats are fighting a pitched battle
over spending cuts with Republicans, who were energized by big wins
in November elections after campaigning for smaller government to
curb a massive U.S. budget deficit.
The federal government will run out of money for non-essential
operations if the two parties fail to agree on funding by the end
of next week. That could lead to a shutdown -- something
Republicans are wary of repeating because voters blamed them for
disruption to benefits and services in the three-week shutdown of
1995-96.
Senate Democratic leaders on Tuesday called on House Republicans to
start immediate negotiations.
"We cannot afford a shutdown at this critical point in our economic
recovery," Senate Democratic Leader Harry Reid told reporters in a
hastily called telephone conference call.
"There is no question: We need to cut government spending," Reid
said. "The debate isn't whether we cut, it is how we cut."
According to one Senate aide who asked not to be identified, there
already have been conversations between Reid and Boehner and
between their top staffers. But Reid insists there hasn't been
bipartisan negotiations.
The White House said that neither party wanted to see a government
shutdown, but stressed it had a plan in place if this outcome could
not be avoided.
"All four leaders of Congress, leaders of the House, leaders of the
Senate, have expressed their confidence that we can work this out
before March 4, and we believe we can," said White House press
spokesman Jay Carney.
Boehner did not specify the level of cuts that would have to be
included in a stopgap spending bill in order for House Republicans
to embrace it.
The Republican-controlled House has backed a bill lowering spending
by $61 billion through September, putting it on a collision course
with the Senate, where Democrats warn such steep reductions could
sap a fragile U.S. economic recovery.
Lawmakers must agree on legislation to fund federal programs until
the end of the fiscal year on September 30. A current stop-gap
financing bill expires March 4.
This risks a shutdown in which thousands of federal workers could
be laid off, hitting services for millions of Americans and
yielding uncertain dividends for whichever political party is
blamed for the resulting inconvenience.
But in a demand that could complicate negotiations, Senate
Democrats are insisting the stopgap funding bill keep spending at
current levels, which conservative Republicans are against.
The White House Office of Management and Budget said it was ready
for a shutdown but saw the chances of one as slim.
"OMB is prepared for any contingency as a matter of course ...
Since 1980, all agencies have had to have a plan in case of a
government shutdown, and they routinely update them," said OMB
spokesman Kenneth Baer.
During the last government shutdown, from Dec 16, 1995 to Jan 6,
1996, all U.S. national parks were closed, distribution of benefits
was disrupted and hundreds of thousands of federal workers were
laid off temporarily.
Obama has proposed a budget for the next fiscal year, starting on
October 1, that would freeze discretionary spending for 5 years to
curb the deficit by $400 billion over 10 years, although the
deficit would still hit $1.645 trillion this fiscal year before
dropping to $1.101 trillion in fiscal 2012.
(Additional reporting by Caren Bohan, Thomas Ferraro and Donna
Smith)