House passes bill to avert government shutdown

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The House of Representatives on Tuesday voted to extend government funding for two more weeks, a move that would avert a federal shutdown but do nothing to resolve a bitter debate over the federal budget.

The Democratic-led Senate agreed to vote on the House-passed measure at 11 a.m. EST (1600 GMT) on Wednesday. Senior aides said the Senate would give it final congressional approval, clearing the way for President Barack Obama to sign the bill into law.

Current funding is due to expire on Friday. The bill drafted by House Republican leaders, which passed by a vote of 335-91, would give Obama and Congress until March 18 to agree on funding levels for the rest of this fiscal year that ends on September 30.

White House spokesman Jay Carney said Obama was encouraged by this progress and reiterated both sides must find common ground "to reach a long-term solution that removes the kind of uncertainty that can hurt the economy and job creation."

Republicans, spurred on by Tea Party fiscal conservatives, have made spending cuts their top priority after winning control of the House in November on a promise to scale back government and trim a massive budget deficit.

"All of us are working to cut spending and to get the federal government out of our pockets, off our backs, and out of our lives," said Republican Representative John Culberson.

Lawmakers are trying to tame a budget deficit that is projected to hit a record $1.65 trillion this year, which would equal 10.9 percent of the economy.

Obama has suggested cuts but warns that slashing spending too quickly will endanger economic recovery.

Despite both parties apparently agreeing on spending for the next two weeks, Democrats say the $61 billion in cuts that House Republicans want this fiscal year would endanger the economic recovery and throw hundreds of thousands of people out of work at a time when the jobless rate is 9 percent.

Two weeks will not be enough time to hammer out the stark differences between the two parties, many Democrats say. That would require another short-term extension.

"I'm afraid we're going to be back here doing this again," said Democratic Representative Norm Dicks.

Newly elected Republican conservatives, who have led the push for deep spending cuts, may be reluctant to go along with further temporary extensions.

"I don't see much wiggle room," Republican Representative Tim Scott, a favorite among Tea Party activists, told Reuters Insider.

With polls showing the public would blame both Democrats and Republicans, along with the president, for any shutdown, the Senate approved legislation to punish lawmakers and Obama if they fail to keep the government fully open.

On a unanimous vote, the Senate passed a bill by Democratic Senator Barbara Boxer to halt paychecks to members of Congress and the president during any government shutdown.

Under current law, the president and lawmakers would continue to be paid during a shutdown while hundreds of thousands of federal workers would likely be furloughed.

"We don't think it's fair to treat people differently," Boxer said in promoting her bill, which now goes to the House for consideration.

Possible compromise

One possible area of compromise on spending emerged when congressional investigators released a report detailing hundreds of overlapping government programs.

The report by the Government Accountability Office found 82 separate programs dedicated to improving teacher quality and 56 programs devoted to increasing financial literacy.

Lawmakers from both parties said the report could help find ways to cut spending while not compromising the government's effectiveness.

Other fights loom even if lawmakers agree on spending for this year. They must begin work soon on a budget for the next fiscal year, which starts on October 1, and will also have to hold a vote in the coming months on increasing the government's borrowing authority.

Federal Reserve Chairman Ben Bernanke said a failure by Congress to raise the debt ceiling could lead to a default that would have dire consequences for the economy.

"It would be an extremely dangerous and very likely a recovery-ending event," he told the Senate Banking Committee.

Beyond the yearly budget cycle, many experts warn that Congress will have to tackle the growth of Medicare and other popular benefit programs that are projected to eat up a growing share of the budget in the years to come.

Some Republicans have begun looking at changes to the popular Social Security pension program but they are sure to run into fierce Democratic opposition.

Tax increases are probably needed as well as spending cuts to close the deficits, a bipartisan group of former tax officials told the Senate Finance Committee.

Obama and some lawmakers are weighing an overhaul of the tax code that would eliminate loopholes and trim the top corporate rate.

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