High-stakes negotiations to head off a government shutdown went down to the wire Thursday night after President Obama rejected a last-minute bid by House Republicans to give the rest of the government a one-week reprieve on a shutdown.
Mr. Obama said he would veto a House-passed bill that would fund U.S. troops through the end of fiscal year 2011 and fund the rest of government through April 15. That veto threat leaves just two options: Either all sides could agree to a full-year deal to fund all of government, or the government will shut down at midnight Friday.
Mr. Obama, House Speaker John A. Boehner and Senate Majority Leader Harry Reid met privately twice Thursday to try to reach an agreement, but publicly engaged in a testy brinksmanship.
"We made some progress today. Those differences have been narrowed," Mr. Obama announced at the White House after another nighttime meeting, the second time the three men gathered Thursday. "There's still a few issues that are outstanding. They're difficult issues. They're important to both sides."
He said staffers from all sides will work throughout the night, and said he expects an answer back from Mr. Reid and Mr. Boehner "sometime early in the day" on Friday as to whether he should begin the process of shutting the government down.
In a joint statement, Mr. Reid and Mr. Boehner agreed the issues "have narrowed," but said nothing more about the sticking points or the chances of success.
A shutdown would shutter national parks and the Smithsonian, and could halt Internal Revenue Service tax audits and processing of tax returns that are filed on paper, though electronic refunds still will be sent. Social Security and Medicare benefits will still be paid, though new applications could be delayed.
Administration officials said about 800,000 federal workers, about 20 percent of the total federal workforce, would be furloughed.
There are three moving parts to the negotiations to try to work out a long-term deal: The total dollar amount of cuts to be made from last year's spending level, the makeup of those cuts, and what legislative add-ons, known as "policy riders," will be included.
In February, the House passed a bill that cut $61 billion from 2010 spending levels, and included dozens of riders such as stopping federal funding for Planned Parenthood and halting Obama administration plans on health care and the environment.
The Senate, meanwhile, has yet to pass a bill of its own. Last year's Democrat-led Congress did not pass a budget or any of the annual appropriations bills for 2011, instead funding the government through a series of continuing resolutions.
With negotiations sputtering on a full-year bill to run through Sept. 30, the end of fiscal year 2011, House Republicans sought to give the sides a one-week reprieve, as has happened six times already. Mr. Obama has said that short-term funding bills must cease.
The Republicans wrote a bill to fund the military fully through the rest of fiscal year, while keeping other government functions funded through April 15, which they said would allow more time to strike a broader deal.
On Thursday, the bill passed by a 247-181 vote with 15 conservative-leaning Democrats joining most Republicans in backing it. Six conservative members of the GOP voted against the bill.
But just before the vote, the White House issued a statement promising a veto.
"This bill is a distraction from the real work that would bring us closer to a reasonable compromise for funding the remainder of fiscal year 2011 and avert a disruptive federal government shutdown that would put the nation's economic recovery in jeopardy," the White House said, arguing that the House bill "simply delays that critical final outcome."
Saying that he, too, opposed the House bill, Mr. Reid did not schedule it for floor action in the Senate.
Republicans said Mr. Obama's promised veto makes a government shutdown almost impossible to avoid since, given that funding bills must originate in the House, that bill is the only one that could pass by the shutdown deadline.
"To have the president of the United States issue a veto threat on a bill to fund our troops is an outrage," said House Republican Conference Chairman Jeb Hensarling, Texas Republican.
Lawmakers began warning constituents of the possible effects of a shutdown, including some closed federal offices.
Most federal employees would still be expected to report for work and would continue to earn pay, though paychecks would stop until Congress resumes funding.
In the shutdown negotiations, Mr. Reid said all sides have essentially agreed to a dollar amount in a final agreement, and said the delay is the policy provisions. He doesn't want any of those riders included.
Mr. Boehner, though, said policy riders are included in every broad spending bill and that both parties have made use of riders.
A 2008 Congressional Research Report recapping appropriations during the first year Democrats controlled Congress while President George W. Bush was in office said that year's spending bills included nearly two dozen policy riders.
Among new riders Democrats added that year were a provision tying the Bush administration's hands on offering new oil-shale drilling leases on public lands, and another provision blocking Mr. Bush's EPA from following through on a proposed rule to change hazardous air-pollutant standards — similar to Republicans' proposed limit on Mr. Obama's EPA rules.
Democrats argue they've met Republicans halfway on spending cuts by agreeing to more than $30 billion in reductions in 2011, compared with 2010 spending levels. House Republicans' bill cut $61 billion.
Both of those cut totals, while historic in real dollar terms, pale in comparison to the size of federal spending and deficits.
The federal government ran a deficit of $189 billion in March alone, according to preliminary estimates by the Congressional Budget Office.
The total deficit for the first six months of fiscal year 2011 is $830 billion, putting the government on pace for a new record.
Overall, government revenues are up $66 billion compared with last year, but spending is up much more — $179 billion more than the first six months of 2010. CBO says most of that was a result of changes in the way Wall Street bailout money is accounted for, and said if those accounting issues are taken away, spending is up only $15 billion over last year.
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