US lawmakers reach deal to avert govt shutdown

The agreement included some $38.5 billion
dollars of extra spending cuts
© AFP/File Jewel Samad

AFP

WASHINGTON (AFP) - A dramatic 11th-hour deal slashing spending has staved off a US government shutdown, ending a rancorous budget row between President Barack Obama and his newly empowered Republican foes.

Party leaders clinched the agreement, including some $38.5 billion dollars of extra spending cuts, after intense bargaining, barely an hour before the federal government effectively ran out of money at midnight Friday.

The showdown was just the first bruising engagement in a string of likely clashes between Obama and Republicans boosted by a new crop of conservative Tea Party lawmakers, as the president fires up his 2012 reelection bid.


Obama boasted in remarks at the White House that cooperation born of difficult compromises had yielded "the biggest annual spending cut in history" at a time when Washington faced a projected annual shortfall of $1.65 trillion.


"Some of the cuts we agreed to will be painful. Programs people rely on will be cut back. Needed infrastructure projects will be delayed," the president said.

He continued to sell the deal to the public on Saturday, saying in his weekly radio address that "beginning to live within our means is the only way to protect the investments that will help America compete for new jobs."

House Speaker John Boehner told his restive Republican caucus behind closed doors he had sealed an agreement with the White House to fund the government for the rest of the fiscal year ending October 1.

"This has been a lot of discussion and a long fight. But we fought to keep government spending down because it really will, in fact, help create a better environment for job creators in our country," he told reporters afterwards.

Lawmakers in both chambers raced to approve a stopgap funding measure before midnight to give negotiators until Thursday to finalize the overall deal.

The Senate passed it by voice vote, the House by a 348-70 margin at 12:39 am (0439 GMT) Saturday.

"It's been a gruelling process. We didn't do it at this late hour for drama. We did it because it has been hard to arrive at this point," said Democratic Senate Majority Leader Harry Reid, his party's lead negotiator.

Anticipating a possible insurrection, Boehner told Republicans "this is the best deal we could get out of them," according to two officials who attended the emotional gathering.

Republican Representative Marsha Blackburn wept about the possible impact of spending cuts on a military base dear to her district, a witness said. Another came from a formal event still in black tie. Another wore a ball gown.

The agreement came after a long day in which Republican leaders parried every question with a "no deal" up to three hours before the deadline, despite telephone discussions between Obama and Boehner.

Participants nervously alluded to 1995, when the US government last plunged into a shutdown caused by a funding row, and Bill Clinton outmaneuvered his Republican foes and rescued a sagging presidency.

"We had an opportunity tonight to decide whether we wanted to repeat history or make history. We decided to make history," said Republican Senate Minority Leader Mitch McConnell.

Obama had warned that a prolonged government shutdown could jeopardize America's slow recovery from the worst economic crisis since the 1930s Great Depression.

A shutdown would have seen around 800,000 federal employees temporarily laid off, paychecks for frontline combat soldiers delayed and national parks and monuments closed.

But operations vital to national security such as the war in Afghanistan and border services would have gone on as normal.

McConnell wasted little time signalling that Republicans would do battle with Obama on his request to raise Washington's ability to borrow -- an issue that has inflamed the Tea Party.

"Senate Republicans and House Republicans -- and I hope many Democrats as well -- are going to say 'Mr President, in order to raise the debt ceiling we need to do something significant about the debt,'" he said.

The overall spending accord removed what Democrats had described as the biggest obstacle to a deal: A Republican-crafted measure stripping federal funding from the Planned Parenthood clinics that provide abortions.

Obama canceled a planned trip to Indiana on Friday to stay in Washington and see the final push to the end. He also called off a weekend away with his family in the historic Virginia city of Williamsburg.

© AFP -- Published at Activist Post with license

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Obama, Republicans seek spending cut endgame

© AFP/Getty Images/File Spencer Platt

AFP

WASHINGTON (AFP) - President Barack Obama and his Republican foes, spurred on by archconservatives irate over gaping deficits, have until Friday to agree on what may be the deepest spending cuts in US history.

Key Democratic and Republican lawmakers, joined by top Obama aides, are inching privately towards a deal to fund the government to October 1 and avert a partial federal shutdown triggered when a short-term funding measure expires at midnight on Friday.

Republicans have publicly disputed a Democratic claim that the two sides have agreed to slash $33 billion (23 billion euros) and are now arguing over where to make the cuts, saying no single component is set in stone until a comprehensive deal is reached.
The outcome of the fight is sure to shape Obama's 2012 reelection prospects, and will help determine the political clout of the "Tea Party" movement that has demanded deep spending cuts in return for their support for Republicans.

In a rare moment of public agreement, Obama and Republican Speaker John Boehner both warned Friday against failure to reach a compromise -- though each gave a different reason for fearing a government shutdown.

Speaking after a new jobs report that found unemployment at a two-year low -- but still high at 8.8 percent -- the president warned that a shutdown could hamper the fragile US recovery.

"It would be the height of irresponsibility to halt our economic momentum because of the same old Washington politics," Obama said. "That could jeopardize the economic recovery."

Boehner called the jobs report "welcome news" but stressed that "Washington needs to do a lot more (to) get our economy moving again" and warned that a shutdown would carry a high price tag because of disrupted government contracts.

"Frankly -- let's all be honest -- if you shut the government down, it'll end up costing more than you save," he told reporters.

Boehner's comments came a day after scores of "Tea Party" members demonstrated a stone's throw from the US Capitol to demand that Republicans stiffen their spine and reject compromise with Democrats.

"It's time to pick a fight," Republican Representative Mike Pence told the rowdy crowd under a chilly drizzle, warning that the standoff was "a defining moment for the new (Republican) majority in Congress."

Pence and other speakers said they were willing to shut the government down if Democrats rejected what he called "a small down payment on fiscal discipline and reform" -- putting Boehner in a potentially tough spot, with 87 new House members who owe their November election in part to the Tea Party.

"We're going to fight for the largest spending cuts that we can get, and I'm hopeful that we'll get it as soon as possible," Boehner promised Friday.

A day earlier, the speaker had sounded more defensive, saying Republicans "can't impose our will on the Senate" and only control the House, which passed $61 billion dollars in cuts early this year.

If the $33 billion figure anchors the final deal, Republicans could credibly claim a victory over Democrats, who condemned such a figure in February as "extreme" and "draconian."

But Democrats have vowed to hold the line against what Democratic Senate Majority Leader Harry Reid on Friday called "ridiculous" Republican proposals, notably one that would block the Environmental Protection Agency from regulating greenhouse gas emissions blamed for global warming.

And Boehner may need moderate Democrats' help to muscle the compromise bill to passage -- something he can count on if the deal is "reasonable," according to number-two Democratic Senator Dick Durbin.

Obama on Friday expressed optimism that a final compromise is "within reach" even though "there's still details and differences to work out."

But in separate phone calls to Reid and Boehner on Saturday, he told them that budget negotiators were "running short on time."

The president told the congressional leaders that he had directed White House budget negotiators "to work hard over the weekend with the appropriators to help reach resolution on the composition of those cuts," a White House statement said.

Meanwhile, Boehner, delivering a weekly Republican address on Saturday, disputed the claim that the sides had agreed on a number for cuts.

"You've heard Democrat leaders claim an agreement has been reached on this issue. But let me be clear, there is no agreement," he said.

© AFP -- Published at Activist Post with license

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Portugal braces for govt collapse over debt vote

Wikimedia image Lars Aronsson

Barry Hatton
Yahoo/AP

LISBON, Portugal (AP) -- Portugal's government is on the verge of collapse after opposition parties withdrew their support for another round of austerity policies aimed at averting a financial bailout.

The expected defeat of the minority government's latest spending plans in a parliamentary vote Wednesday will likely force its resignation and could stall national and European efforts to deal with the continent's protracted debt crisis.

The vote comes on the eve of a two-day European Union summit where policymakers are hoping to take new steps to restore investor faith in the fiscal soundness of the 17-nation eurozone, including Portugal.

Last year, both Greece and Ireland had to accept multibillion dollar rescue packages after markets lost faith in their governments' efforts to deal with their debt burdens.

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