US budget deal elusive, government shutdown looms

Facing a midnight deadline, the White House and Congress worked furiously on Friday to break a US budget deadlock and prevent a federal government shutdown that would idle hundreds of thousands of workers.

President Barack Obama and congressional leaders failed to reach a deal in late-night talks on Thursday as Democratic and Republican negotiators raced the clock to agree on government funding for the rest of the fiscal year that ends September 30.

Democratic aides said the two sides remain at odds over a Republican push to include birth control restrictions in the deal, while Republicans said the two sides still differ on roughly USD 6.5 billion in cuts over current spending levels.

"There's no deal yet unfortunately," Steny Hoyer, the No 2 Democrat in the House of Representatives, told NBC's "Today" program on Friday.

"I think we're very close. I think we've come 70% of the way in terms of dollars. That's a long way to go in trying to reach compromise," Hoyer said.

Without an agreement on spending for the next six months, money to operate the government runs out at midnight on Friday (0400 GMT on Saturday) and agencies such as the Internal Revenue Service would begin a partial shutdown.

The White House said a shutdown would idle 800,000 federal government workers and put a crimp in the US economic recovery. Vital services such as defense, law enforcement, emergency medical care and air traffic control would continue.

The showdown is the biggest test of leadership for Obama, a Democrat, and congressional leaders since Republicans made big gains and took control of the House of Representatives in elections last November.

The confrontation carries big political risks for both Democrats and Republicans, who could be seen by voters as failing to make compromises.

'A very simple agreement'

Hoyer said Democrats would push for a one-week funding extension with no spending cuts to give more time for negotiations, after Obama threatened to veto a bill passed by the Republican-led House for a one-week extension that included another USD 12 billion in spending cuts.

"What we're going to be trying to do today is to make sure that we keep the government operating over the next seven days with a very simple agreement," Hoyer said.

Obama has held four face-to-face meetings with House Speaker John Boehner, the top Republican in Congress, and Senate Majority Leader Harry Reid, the top Democrat in Congress, over three days.

Obama said after Thursday night's meeting that a few "difficult issues" still must be resolved. He did not provide details.

Hopes for a deal have been dashed repeatedly in the last few days, and the two sides have accused each other of playing political games and trying to shut down the government.

Boehner is under pressure to stand firm in the talks from Tea Party conservatives who helped fuel last year's big Republican election gains with promises of deep spending cuts and reduced government.

He conceivably could ram a spending-cut deal through the House without the support of the dozens of Tea Party freshmen. In doing so he would rely on support from a coalition of more moderate Republicans and moderate Democrats.

But no House speaker likes to abandon any wing of his or her political party in a legislative fight. It's also unclear whether Tea Party activists would try to remove Boehner from power sometime down the road if he got on their wrong side.