Asia-Pacific

Obama, Congress make budget deal, avert shutdown

(Agencies)
Updated: 2011-04-10 08:25

WASHINGTON - US President Barack Obama and congressional leaders struck a last-minute budget deal on Friday, narrowly averting a government shutdown that would have idled hundreds of thousands of federal workers.

US President Barack Obama re-reads his statement from the Blue Room about the budget at the White House in Washington April 8, 2011. [Photo/Agencies]

With little time to spare before a midnight deadline for a government closure, Obama's Democrats and opposition Republicans agreed to a bitterly fought compromise plan that would cut $37.8 billion in spending for the rest of the fiscal year.

Congress moved quickly to approve a seven-day stopgap funding measure to keep federal agencies running into next week until the budget agreement can be formally enacted.

A shutdown, the first in more than 15 years, would have meant furloughs for much of the federal work force, suspension of key government services and the closing of many national parks and monuments, while potentially undermining the US economic recovery.

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But the biggest incentive for a deal may have been the risks that failure would have posed for Obama, his fellow Democrats and the Republicans amid signs of public frustration with the rancorous budget fight in Washington as the 2012 presidential election campaign gathers steam.

"Tomorrow, I'm pleased to announce that the Washington Monument as well as the entire federal government will be open for business," Obama said in a late-night appearance at the White House.

The deal for the rest of the fiscal year, which came after days of tense negotiations and brinkmanship, will yield the largest domestic spending cuts in US history, an achievement for Republicans who won control of the House of Representatives last November on a promise to scale back government.

But Obama and the Democrats can take solace in having beat back a Republican effort to block birth control funding to the Planned Parenthood family planning organization, because it also provides abortions, though not with public money.

Despite the resolution, the political fight raised questions about the ability of Obama and a divided US Congress to deal with bigger issues looming down the road, from raising the federal debt ceiling to reining in budget deficits.

Investment firm Goldman Sachs had estimated a government shutdown lasting more than a week could have cost the economy $8 billion in missed federal spending, dragging down growth.