US Government Shutdown Averted by Late Night Deal in Congress

Obama and Democrats forced to accept $39bn package of cuts while Republicans gave way on healthcare for women

by Ewen MacAskill

WASHINGTON - A shutdown of the US federal government scheduled to begin on Saturday was averted after the Democrats and Republicans reached agreement only hours before midnight on budget spending cuts.

John Boehner, Speaker of the House of Representatives, negotiating on the phone with President Obama on Friday evening. In the end, the Democrats agreed to even more cuts than the House version originally demanded.The shutdown would have triggered major disruptions across the country and could have set back the country's fragile economic recovery. Hundreds of federal agencies would have closed down and about 800,000 federal staff faced suspension.

The deal came after days of negotiation between Obama and the Republican House Speaker, John Boehner, and the Democratic leader in the Senate Harry Reid. A deal had appeared to be tantalisingly close several times but was not finalised, until Friday night.

Boehner, an hour before midnight, told journalists in Congress: "I am pleased that Senator Reid and the White House have come to an agreement that will cut spending and keep government open."

It would have been the first federal government shutdown since 1995-96 when there was a stand-off between the Republicans and the Clinton White House.

Barack Obama tore up his schedule for Friday, including the start of a family weekend break in Virginia, to concentrate on negotiations with Republicans. He had hoped to reach a compromise Friday morning but discussions dragged out throughout the day.

Obama portrayed the compromise as a tribute to US democracy as he said: "Tomorrow ... the entire federal government will be open for business."

Reid, like Obama, paid tribute to the Republicans in spite of the repeated clashes over the last week. "This has been a long process," Reid said. "It has not been an easy process. Both sides have had to make tough choices."

The Republicans forced the Democrats to agree to $39bn (£23bn) in spending cuts in this year's budget to September, $6bn more than the Democrats were prepared to accept earlier this week. In return, the Republicans dropped a demand to cut funding for Planned Parenthood, an organisation providing healthcare for women. Republicans objected to the organisation's links to abortion.

Boehner had as many problems in negotiations with his own Republican party as he did with the White House and Democratic members of the House. Many Republicans were elected in November with the support of the Tea Party movement who have demanded huge reductions in the federal deficit.

After reaching a deal with the White House and the Congressional Democrats, Boehner had to take the proposal to Congressional Republicans for final approval.

Boehner said Congress would pass a temporary spending measure to keep the government open until mid-way through next week. This would allow time for passage of the budget bill covering spending up until the end of the fiscal year in September.

The deal came after Obama spoke twice by phone Friday with Boehner.

The Republicans faced being blamed for the disruption if they had not reached a deal. But Obama could have suffered too, accused of weak leadership, unable to prevent a government shutdown.

About 800,000 federal employees would have been suspended without pay from Monday, more than a million troops at home and abroad would not have received pay, tax offices would have been disrupted and, in Washington DC, rubbish collection, parking control and other services would have ceased.

Pollution checks by the Environmental Protection Agency would have stopped across the US, as would monitoring of Wall Street transactions.

The White House, Congress, the Pentagon and hundreds of other bodies would have had to reduce staff.

The immediate impact of a shutdown would have been felt by tourists hoping to visit some of America's most popular attractions, the 400 national parks, monuments and historic sites.

Queues grew at passport offices on Friday as tourists and people travelling for business or other reasons put in their applications afraid of a closedown.

The dispute offers a glimpse of bigger battles to come over the 2012 budget, in which Republicans are likely to seek much bigger cuts.

A Gallup poll published on Friday showed 58% of those surveyed favoured a compromise in this week's row, with 33% backing the Republicans to hold out.

© 2011 Guardian News and Media