US lawmakers near deal to avert government shutdown

Reuters: U.S. lawmakers on Thursday were close to a deal on a massive spending bill to keep the government running through the fiscal year ending on September 30 and avert a shutdown when current funds run out at midnight on Friday.

Democratic aides in Congress told Reuters the potential deal was near but they did not provide details. If a compromise is reached, the full Senate and House of Representatives would have to vote on the measure before it could be signed into law by President Barack Obama, who earlier in the day urged prompt action.

It was not yet clear when those votes would be held but with time running out, Congress will have to work fast.

Meanwhile, a separate set of negotiations continued on legislation to extend a payroll tax cut beyond December 31 when it is set to expire. These talks also include a likely extension of long-term unemployment benefits.

As congressional negotiators hurriedly searched for compromises, Obama warned Congress not to leave for a holiday break without finishing its business.

“Congress should not and cannot go on vacation before they have made sure that working families aren’t seeing their taxes go up by $1,000 and those who are out there looking for work don’t see their unemployment insurance expire,” Obama said.

Party leaders likely fear a backlash from angry voters who already have lost confidence in Congress’s ability to pass even the most basic legislation and will get a chance to render their verdict in the 2012 presidential and congressional elections.

But leaders will be mindful that any deals they broker will have to be approved by the full Senate and House of Representatives. That is a particular concern for House Speaker John Boehner, whose Republican caucus includes Tea Party-aligned lawmakers who have not been afraid to buck his leadership when they think he is compromising on conservative principles.

Republican Representative Joe Walsh told Reuters that a nearly $1 trillion bill to fund the government through September 2012 would be difficult to support because of its price tag.

In two separate negotiating tracks -- one for the massive spending bill and the other to extend a payroll tax cut and long-term unemployment benefits -- congressional aides and leaders from both parties were trying to strike deals by either late on Thursday or on Friday.

If they do, Congress might be able to wrap up its work for the year by this weekend or early next week. Failure would mean either a government shutdown when agencies’ money runs out at midnight Friday, or the need for a temporary funding bill.

Democratic and Republican negotiators were trying to reach agreement on how to cover the $120 billion cost of the payroll tax cut extension after Democrats dropped their demand that it be paid for with a surtax on millionaires.

One senior Senate Democratic aide said that some lawmakers from both parties were even mulling not paying for some of the payroll tax cut or related costs in that measure. Doing so could cause even more House Republicans to vote against the bill.

The payroll tax cut would give 160 million Americans about $1,000 a year in additional spending power. The White House and a number of economists say it would boost the country’s fragile economic recovery, although many Republicans question that. On the spending bill, there were some major differences between Democrats and Republicans over policy initiatives backed by federal funds, such as whether to place new restrictions on U.S. travel to Cuba. It was not yet known how those were being resolved.

The heightened activity on Capitol Hill on Thursday raised hopes that Congress would avoid the first government shutdown since late 1995 and early 1996.

Earlier in the day, Senate Republican leader Mitch McConnell said he was “confident and optimistic we’ll be able to resolve both (bills) on a bipartisan basis.”