US Congress struggles to find budget deal

yesterday to search for a deal on budget cuts to keep federal agencies operating beyond tomorrow.
The two sides must resolve what programmes would go under the knife to satisfy Republican demands for sharp spending cuts. The size of the package is still at issue as well. Negotiators had tentatively agreed on a figure of US$33 billion, but Republican House of Representatives Speaker John Boehner is now pushing for a new target of US$40 billion.
Separate negotiating sessions at the White House and the Capitol on Tuesday failed to produce an agreement between Boehner and Democratic leaders, who blamed each other for an impasse that could throw hundreds of thousands of government employees out of work.
The budget showdown is the biggest political test for both parties since Republicans swept to power in the House and made big Senate gains in last year’s election on promises to slash government spending and reduce the federal government.
President Barack Obama vowed to keep negotiators at work until they agree on a budget for the remainder of the fiscal year, which ends on September 30. Temporary funding expires at midnight tomorrow.
“The only question is whether politics or ideology are going to get in the way of preventing a government shutdown,” Obama told reporters after the White House meeting failed to find common ground.
Senate Democratic Leader Harry Reid sounded a note of optimism after meeting privately with Boehner later in the day.
“We are still negotiating in good faith, we are not that far apart and hopefully we can work something out,” Reid said on the Senate floor.
Hours earlier, Reid had said he was “not optimistic”.
Boehner is under pressure from fiscal conservatives aligned with the Tea Party movement who oppose any compromise.
The outcome is likely to set the stage for even bigger budget battles ahead and echo through the 2012 campaign for the White House and control of Congress.
Boehner’s deputy, House Republican Leader Eric Cantor, said it was not likely a deal could be reached by midnight tomorrow, when current funding is set to expire.
Obama said there was no excuse for not getting a deal done in the next few days.
A government shutdown would ripple through an economy still recovering from the worst recession since the 1930s.
The military would continue to fight wars in Iraq and Afghanistan and retirees would continue to get their social security benefits, but passport offices, bankruptcy courts and national parks would likely close.
Most of the 4,4 million federal workforce will go to work because their jobs are deemed essential.
The Internal Revenue Service would continue to collect taxes, but would likely not issue refunds.
Financial markets would likely not be affected by a shutdown as the Treasury Department would continue to make debt payments, analysts said, but state and local governments could see their own budget woes worsen. – AFP.