updated 2/28/2011 2:02:59 PM ET 2011-02-28T19:02:59

The White House says Congress is "moving in the right direction" as lawmakers work on a compromise spending bill that could temporarily prevent a government shutdown.

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However, Obama spokesman Jay Carney wouldn't say whether Obama would sign a two-week plan from House Republicans that would cut $4 billion in federal spending. Carney says funding the government in two-week increments would create uncertainty and be bad for the economy.

Congress moves toward deal to avert shutdown

Carney says the administration wants any temporary measure to allow enough time for lawmakers to negotiate a bill that would fund the government through the end of the fiscal year, though he wouldn't say how long he thought those negotiations would take.

The House will begin debate on the two-week spending plan on Tuesday.

Story: Why 2011's budget woes don't mirror 1995

Threat of possible shutdown
The United States is now less than a week away from a possible shutdown of the federal government — the first since 1996.

Video: Congress makes progress on the budget (on this page)

Although the short-term funding agreement could forestall that dramatic outcome for two weeks beyond the Friday deadline, Republicans and Democrats remain poles apart on a longer-term solution for pulling the United States out of its spiraling debt crisis. The U.S. debt is at a record $14.2 trillion.

While a threatened shutdown carries heavy symbolism, it's far from effectively locking all the doors of government or turning out the lights all across Washington.

The cost of keeping the government's lights off

History, however, shows that the political consequences can be huge, especially if the conflict drags on beyond a few days.

Two shutdowns in 1995 and 1996, when President Bill Clinton and a new Republican majority in Congress were at loggerheads over the budget, gave the then-president critical momentum on his way to re-election. Republicans took most of the blame in that dramatic conflict and are moving carefully to avoid a shutdown this time around.

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GOP, Dem impasse
At issue are government agency operating budgets passed each year by Congress that account for about one-third of the overall federal spending and are funded through appropriations bills. When they controlled both houses of Congress last year, Democrats failed to pass a single such measure to cover the current fiscal year which runs through next September.

Republicans, using the power of their new majority status in the House of Representatives and under heavy pressure from newcomers in the caucus supported by the ultraconservative Tea Party movement, voted last week to cut $61 billion out of the budget for the seven months remaining in the current fiscal year.

Story: House GOP say shutdown irresponsible

In the Senate, where Democrats still hold the majority, that kind of dramatic reduction in government services has no chance of passage. President Barack Obama has also threatened to veto that proposal.

Senate Majority Leader Harry Reid said Democrats will try to pass a 30-day measure to keep the government spending frozen at current levels for that period.

House Speaker John Boehner said Republicans would not agree to any short-term plan that does not include spending cuts.

"We have a moral responsibility to address the problems we face," Boehner said. "That means working together to cut spending and rein in government — not shutting it down."

In the face of that stalemate, Boehner said the alternate plan is "a shorter-term bill that will also keep the government running while including reasonable spending cuts at the same time."

House Republicans now plan to advance a two-week extension of government funding that cuts $4 billion in that period. That figure, however, is roughly equal to the $61 billion-pace of cuts already passed by the lower house.

But the proposal calls for some of those cuts to hit areas mentioned by Obama for reductions in his next budget as well as earmarks, or lawmakers' special projects. Obama wants to see an end to that practice whereby legislators slip spending for projects in their districts or states into larger appropriations bills.

'Headed in the right direction'
While details of those cuts remain fuzzy, Senate Budget Committee chairman Kent Conrad said Sunday he thought the measure could lead to a short-term solution.

"I think that's clearly headed in the right direction," the Democrat said on a Sunday television news show. "It is acceptable to me to have $4 billion in savings in a two-week package, sure. The makeup of that, you know, is up for discussion and negotiation. That negotiation is ongoing. And I'm confident we'll achieve conclusion on that."

Obama, in his weekly radio address Saturday, urged lawmakers to quickly find a resolution to the dispute "so we can accelerate, not impede, economic growth."

Even if the showdown is pushed off for two weeks, it does not end the fight for the remainder of the year. And none of what's under discussion on the immediate battle addresses the major fight that still looms over Obama's $3.7 trillion budget proposal for the fiscal year beginning Oct. 1.

Obama claims his spending plan will produce $1.1 trillion in deficit savings over the coming decade, a 12 percent cut from the federal deficits the administration otherwise projects.

Missing from the president's budget was a substantial reshaping of Social Security, Medicare and other massive, automatically paid benefit programs that bipartisan members of Obama's deficit-reduction commission had recommended last year. That leaves no clear way out of the fiscal crisis as the aging population, prolonged lifespans and ever costlier medical procedures leave the government with enormous debt.

Most Republicans have also shied away from calling for savings from so-called entitlement programs, but that has not stopped them from criticizing Obama's failure to do so.

Rep. Paul Ryan, chairman of the House Budget Committee, has called for such reductions, but would not predict whether they would be included in the 2012 spending plan his panel plans to write this spring as a counter to Obama's proposal.

Copyright 2011 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Video: Congress makes progress on the budget

  1. Closed captioning of: Congress makes progress on the budget

    >>> and round one of the budget battle on capitol hill . the house and senate run in an hour after making some progress on a short-term spending plan to avoid a government shutdown . senate democrats are now backing a two-week deal that includes $4 billion in cuts. what will happen two week frs now? democratic senator kent conrad is chairman of the budget committee and joins me now and has been part of these negotiations. thanks so much. let's review the bidding here. is this just a two-week delay in the inevitable, which would be a shut down, or are you making progress on some of the real disagreements down the road?

    >> that remains to be scene. i hope we avoid a shut down. that would be irresponsible. we have to make more cuts. we have a debt now that is too high. 100% of the gross domestic product of the country. we're borrowing 40 cents of every dollar we spend. we're going to have to cut more. we're going to have to have tax reform . we've got a full plate here.

    >> the white house spokesman jay carney wouldn't say president obama would sign this two-week deal. is he keeping his options open? their point is it sends uncertain signals to the market. do you have any doubt the president would seen this two-week deal? he doesn't want to be blamed for a shutdown.

    >> i think if the pay fors are reasonable and make sense, the president will sign it. i can't speak for him. i assume he would sign it. the larger question, this is we're talking about several billion dollars. but as you know, we've got a $1.5 trillion deficit for this year. we have a debt now over $14 trillion. so, you know, this is really a side show compared to what has to be confronted, which is this long-term debt threat.

    >> well, this is the house speaker was talking about this and he really put it to the democrats and to the white house to take the stand. this is what he had to say.

    >> we have a moral responsibility to address the problems that we face. and that means working tot to cut spending and to reign in government. not shutting it down. they label as pain even our most modest efforts to restore a more moral fiscal policy . what truly will cause pain and suffering is the status quo. doing nothing and leaving our debt on its unsustainable and immoral path.

    >> have the democrats been sort of recognized the immorality to use his phrase of the government spending ?

    >> no, i think not. it's a good speech by the speaker, but the problem is when he had a chance an his representatives had the chance in the president's commission to back a plan that would reduce the deficit $4 trillion, five of the six house represents all voted no. every single one of the house republicans voted no including the house budget chairman. republican budget chairman. the president's representatives, five of the six voted yes. in the senate, five of the six senate representatives voted yes. if the house republicans had matched their words with deeds, we would be on a path to get the debt under control. unfortunately, they all voted no.

    >> now, when it comes to long-term commitments, you've mentioned an entitlement reform. clearly, that has to happen. now, we're on the margins of the 12% of the budget that is not off limits. but time geithner in a briefing with us said he didn't think this was any near term need to do anything about entitlements. down the road, yes, but near term, it was more important to deal with immediate deficit cuts. is the white house too reluctant to take this on?

    >> i can only speak for myself. look, i simply disagree with the secretary on this issue. the fiscal commission, we took it all on. entitlemen entitlements, tax reform , substantial cuts to domestic spending including defense. and 11 of the 18 of us agreed representatives of the president. so they stood up when it counted to put together a plan to reduce the debt $4 trillion. trillion with the "t," over the next ten years. that would put us on a very sound course going forward. that's what's required and again, it was house republicans who voted unanimously against that plan. and that's what we're going to have to go. we're going to have to have both sides come together to get this debt under control.

    >> your gang of six, the bipartisan group of senators has been meeting to come wup a plan. the you give us some sense of the specifics you're willing to suggest with all of the authority that your team has behind it?

    >> well, our group of six, three democrats, three republicans, including four who are members of the commission joined by senator chambliss of georgia and warner of virginia, have met for week, will meet again tomorrow morning . we have an agreement. nothing is agreed to until everything is agreed to. tomorrow's meeting is very important.

    >> is there going to be some entitlement reform, some attack on entitlements as part of this package?

    >> everything is on the table and we've really got two approach approaches. one is along the lines of the fiscal commission. the other is a back-up plan to encourage congress to adopt a comprehensive plan. real consequences if congress fails. and as i say, conclusions have not yet been reached and tomorrow as i say, is an important meeting.

    >> is tomorrow the decisive meeting? do you think you'll be coming out with something after tomorrow or will tomorrow be -- will you be learning tomorrow whether it's a g or no go for something real?

    >> we will know a lot better tomorrow . what progress we're making. we have really a comprehensive review tomorrow morning . i don't think it's des positive. i don't think that's the end of the story. something of this complexity may take additional time.

    >> come back. give us the results when you have them.


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