$38 Billion Budget Deal Reached to Avert Shutdown

Washington – Congressional leaders and President Obama headed off a shutdown of the government with less than two hours to spare Friday night under a tentative budget deal that would cut $38 billion from federal spending this year.

After days of tense negotiations and partisan quarrelling, House Republicans came to preliminary terms with the White House and Senate Democrats over financing the government for the next six months, resolving a stubborn impasse that had threatened to disrupt federal operations across the country and around the globe.

Speaker John A. Boehner, who had pressed Democrats for cuts sought by members of the conservative new House majority, presented the package of widespread spending reductions and policy provisions and won a positive response from his rank and file shortly before 11 p.m.

Both Democrats and Republicans proclaimed they had reached a deal and would begin the necessary steps to pass the bill and send it to Mr. Obama next week.

Democrats said that under the agreement, the budget measure would not include provisions sought by Republicans to limit environmental regulations and to restrict financing for Planned Parenthood and other groups that provide abortions. But Mr. Boehner said in a statement that the agreement included a restriction on abortion financing in Washington.

“This has been a lot of discussion and a long fight,” Mr. Boehner said as he left the party meeting. “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.”

Speaking from the White House after the Republican meeting ended, Mr. Obama said that both sides gave ground in reaching the bargain and that some of the cuts accepted by Democrats “will be painful.”

“Programs people rely on will be cut back,” said Mr. Obama, who said Americans had to begin to live within their means. “Needed infrastructure projects will be delayed.”

The announcements capped a day of drama as lawmakers and members of the federal work force waited anxiously to see whether money for government agencies would run out at midnight.

“We didn’t do it at this late hour for drama,” Senator Harry Reid, the Democratic majority leader, said. “We did it because it has been hard to arrive at this point.”

In the closed-door Republican session, according to people present in the room, Mr. Boehner described the plan as the best deal he could wring from Democrats and said the cuts — an estimated $38 billion in reductions — represented the “largest real dollar spending cut in American history.”

Although both sides compromised, Republicans were able to force significant spending concessions from Democrats in exchange for putting to rest some of the vexing social policy fights that had held up the agreement.

Because of the need to put the compromise into legislative form, Congressional leaders said the House and Senate would vote overnight to pass a stopgap measure financing the government through Thursday to prevent any break in the flow of federal dollars. The actual budget compromise would be considered sometime next week.

The Senate approved the stopgap measure by 11:20 p.m. and the House approved it after midnight. The Office of Management and Budget issued a memo saying normal government operations were back on track.

The developments came after Republicans and Democrats spent the day blaming each other for what could have been the first lapse in government services brought on by Congress in 15 years.

As the midnight deadline approached, efforts to finish a deal intensified, and Mr. Obama and Mr. Boehner spoke by telephone to try to find an agreement.

“Both sides are working hard to reach the kind of resolution Americans desire,” said Senator Mitch McConnell of Kentucky, the Senate Republican leader, who had consulted closely with Mr. Boehner on strategy during the fractious talks. “A resolution is actually within reach. The contours of a final agreement are coming into focus.”

Mr. McConnell’s optimism could not disguise the fact that time was steadily slipping away, and testy leaders of the two parties were pushing hard to shape public perceptions of who was responsible for an impasse that threatened to have serious political repercussions — and to presage even more consequential fiscal showdowns in the months ahead. Democrats said Republicans were insisting on overreaching policy provisions; Republicans said it remained about money.

After nightlong negotiations that ended before dawn on Friday yielded no agreement, Senator Reid went on the offensive. He told reporters and said on the Senate floor that Mr. Boehner, the Senate Democrats and Mr. Obama had essentially settled on $38 billion in cuts from current spending, a figure that represented a substantial concession for Democrats.

But he said that Republicans were refusing to abandon a policy provision that would withhold federal financing for family planning and other health services for poor women from Planned Parenthood and other providers.

“This is indefensible, and everyone should be outraged,” Mr. Reid said on the Senate floor. “The Republican House leadership have only a couple of hours to look in the mirror, snap out of it and realize how truly shameful they have been.”

In a terse statement of his own to reporters, Mr. Boehner said there was “only one reason we do not have an agreement yet, and that is spending.” He asked, “When will the White House and when will Senate Democrats get serious about cutting spending?”

As the day went on, aides reported progress in attempts to reach an accommodation on the family planning provision. Even veteran anti-abortion Republicans, like Senator Tom Coburn of Oklahoma, indicated a willingness to compromise, not wanting the party to be accused of shutting down the government over divisive social policy and diluting its new emphasis on cutting spending. Other Republicans, in interviews and statements, indicated that it was time to end the stalemate.

The dueling characterizations of the negotiations added to the frustration, extending far beyond the nation’s capital, among federal employees and the people who rely on their services, as they waited to find out whether serious disruptions were imminent, and how long they might last.

Despite the disagreement over what still divided the two parties, it was clear the dollar difference had been reduced considerably, to about $1 billion or $2 billion. That amount left some lawmakers and their constituents grappling to understand how the federal government could be shut down over such a relatively small sum. Senator Mark Warner, Democrat of Virginia, said he was embarrassed. “People across Virginia cannot understand why we can’t get this done,” he said.

Allies of Mr. Boehner, the veteran lawmaker in his first months as speaker, said he seemed to be pursuing a strategy of pushing the negotiations to the last possible tick of the clock to appease rank-and-file conservatives, who have been very reluctant to give an inch from the $61 billion in cuts approved by the House.

In a private party meeting Friday afternoon, Mr. Boehner told Republican lawmakers that he was fighting for all the cuts he could get, and regaled them with reports of how angry Mr. Obama was with him for the hard line he has taken in the talks — news that elated his membership.

Emerging from the meeting, Mr. Boehner called the negotiations “respectful,” but added: “We’re not going to roll over and sell out the American people like has been done time and time again in Washington.”

In the absence of a deal, Mr. Boehner again urged the Senate to pass a temporary House budget resolution that would finance the military for the balance of the fiscal year, cut $12 billion in spending from the current year’s budget and keep the rest of the government operating for another week, as Republicans in the House had voted to do.

“This is the responsible thing to do,” he told reporters.

Senate Democrats rejected that approach as a gimmick, and Mr. Obama said he would veto the resolution.

Mr. Reid, who at one news conference was surrounded by about three dozen Democratic senators in an unusual tableau, told reporters that the Senate would explore the possibility of a stopgap bill that would keep the government open for another week. But it was unlikely to clear procedural barriers.

It was an unusual Friday on Capitol Hill, a day when corridors are often empty of lawmakers who have left for the weekend. Instead, they milled about, and took the Senate floor to expound, as they nervously awaited news of an agreement or braced for the expiration of government financing. It was frustrating to some because most lawmakers were not privy to the high-level talks.

“I hope that negotiations are continuing by someone somewhere,” Senator Pat Roberts, Republican of Kansas, said as he spoke about six hours before funding would run out.

Lawmakers said they realized that the outcome of the negotiations would have implications not only for them, but also for the federal work force, the public, the economy and the nation’s image.

“We know the whole world is watching us today,” Mr. Reid said.