Video: Obama revels in temporary budget respite

  1. Closed captioning of: Obama revels in temporary budget respite

    >>> of high political drama and skirting right up to the edge of a midnight shutdown, the american government was open for business today. and while that has members of congress patting themselves on the back for working out a budget compromise, it was president obama who was out running a victory lap today, literally jaunting up the steps of the lincoln memorial this afternoon. the president greeted surprised tourists at one of the places that stood to close if that budget deal hadn't been done. but for all the congratulations, the $38 billion lawmakers trimmed out of the budget amounts to just a drop in the buck net the face of a $14 trillion debt. and more money battles are just around the corner. nbc's mike viqueira begins our coverage. he's at the white house tonight. mike?

    >> reporter: good evening, lester . they are calling it the biggest cut to annual government spending in american history . today, both sides are taking credit, even as they prepare for a bigger budget battle to come.

    >> this is what america is all about.

    >> reporter: president obama surprised tourists today at the lincoln memorial , highlighting the end, for now, of the budget crisis . and that the government is open for business .

    >> because congress was able to settle its differences, that's why this place is open today and everybody is able to enjoy their visit. and that's the kind of future cooperation i hope we have going forward.

    >> reporter: the agreement was reached just 90 minutes before the government would have partially shut down. even as he hailed the deal, mr. obama warned the cuts would be painful.

    >> beginning to live within our means is the only way to protect those investments that will help america compete for new jobs. investments in our kids' education and student loans. in clean energy and life-saving medical research .

    >> reporter: it was a dizzying day of trading offers and racing the clock.

    >> this has been a lot of discussion and a long fight. but we fought to keep government spending down because it really will, in fact, help create a better environment for job creators in our country.

    >> reporter: the agreement trims $38.5 billion from this year's budget . that's $5.5 billion higher than the president wanted early in the week. in the end, both sides claimed victory.

    >> we've agreed to an historic amount of cuts for the remainder of this fiscal year.

    >> reporter: but there was a final sticking point. republican demands to cut federal funding for family planning clinics, including planned parenthood , which, among its medical services, performs some abortions with nontaxpayer funds. in the end, democrats won out and the measure was dropped. but the budget battles may have just gotten started. all told, the new agreement cuts just $1 in $100 of federal spending. next week house republicans will vote on a much bigger, even more controversial plan to slash the national debt , begin with next year's budget .

    >> if we stay on the current path, we are heading toward a debt-fueled economic crisis . meaning massive tax increases, sudden cuts to vital programs, runaway inflation or all three.

    >> reporter: lester , paul ryan and republicans in the house would get there in their debt reduction plan by making what are already controversial changes to medicare. democrats are calling it a privatization scheme. one thing everyone can agree on, unless fundamental changes are made to those entitlement programs , medicare and medicaid , that reduction will not happen. lester ?

updated 4/9/2011 6:22:57 PM ET 2011-04-09T22:22:57

Rivals in a divided government, President Barack Obama and the most powerful Republican in Congress split their differences to stave off a federal shutdown that neither combatant was willing to risk.

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Their compromise is the result of a battle pitting the enduring power of the presidential veto and the White House soapbox — despite a "shellacking" in the last election — against a strong-willed GOP House speaker vaulted into office by a voter revolt against Washington's free-spending ways.

The resulting measure will bleed about $40 billion from the day-to-day budgets of domestic agencies over just the next six months, the biggest rollback of such government programs in history. It allows Speaker John Boehner, R-Ohio, to claim his GOP shock troops had put Cabinet department operating budgets on track toward levels in place before Obama took office. In the end, the White House had to meet Boehner more than halfway on spending.

Story: Budget battle tests Obama's leadership

On the other side was a strong-willed Obama, who mostly succeeded in forcing Republicans to cave in on dozens of controversial conservative policy prescriptions — including rolling back environmental protections and cutting off Planned Parenthood from taxpayer assistance while protecting favored programs like education, clean energy and medical research.

It was, in short, the type of split-the-differences deal that a political scientist might have predicted from the start, given the realities of divided government.

Obama stood firm against GOP attempts to block the Environmental Protection Agency's ability to issue global warming rules and other reversals of environmental regulations. Obama's wins on the environment were matched by a bitter battle in which he said no way to GOP demands to cut off Planned Parenthood from federal help. The results, taken together, pleased core Democratic constituencies of environmentalists and women.

Story: Next up for Washington: Fight over debt

But it's clearly a win for Boehner, who despite accepting billions of dollars in questionable savings demanded by Democrats as a substitute for cuts in domestic programs, ended up basically where he started in the first place. The original plan backed by Boehner in February called for cuts in the range of $35 billion as a campaign promise down payment that reflected the fact that the budget year was half over.

But conservative Republicans, many elected with tea-party backing, demanded far bigger cuts of more than $60 billion that would have led to widespread furloughs and harm to programs like food inspection, tax collection and U.S. overseas diplomatic efforts. The final deal, a product of weeks of wrangling, got Republicans back to their original goal, while avoiding most of the harsher effects of the tea party-backed version.

"We're not going to roll over and sell out the American people like it's been done time and time again here in Washington," Boehner said Friday, hours before the agreement came together. "When we say we're serious about cutting spending, we're damn serious about it."

The agreement was sealed around 10:30 Friday night by staff surrogates of Obama, Boehner and Senate Majority Leader Harry Reid, D-Nev., and communicated to Boehner in the middle of a meeting of all House Republicans. Much of the final days' battles involved a GOP push to preserve modest spending increases for the Pentagon against Democratic raids, while Republicans were forced to accept billions of dollars in phantom savings, cutting money that probably wouldn't have been spent anyway.

"We have a deal," Boehner said, earning applause and praise from the rank-and-file, who credited him with battling to the very end. Boehner, GOP officials said, knew that he would lose leverage to Obama in any shutdown.

"We are behind the speaker 100 percent," said Rep. Virginia Foxx, R-N.C., as she took a phone call outside the closed-door meeting.

Democrats said Boehner was being whipsawed by tea party hard-liners demanding the full roster of cuts and policy riders. But at the same time, Boehner didn't try to squelch such talk and seemed to be playing the tea partiers against the Senate Democrats to win more spending cuts.

"We used every tool we had," said a chuckling GOP leadership aide, who required anonymity to discuss internal deliberations.

The government shutdown that so many feared was headed off just in time and the House and Senate quickly passed an emergency measure to keep the government open until Friday in order to give lawmakers time to draft the measure and advance it through the House and Senate.

As a result, about 800,000 federal workers avoided furloughs while national parks and Washington's tourist attractions remained open Saturday. Obama made a surprise visit to the Lincoln Memorial Saturday afternoon, to the delight of tourists at the monument.

"Because Congress was able to settle its differences ... this place is open today," Obama said. "And that's the kind of future cooperation I hope we have going forward."

Obama was referring to upcoming, and far bigger, battles over cutting the budget further and advancing must-pass legislation this summer to permit the government to borrow more money to meet its obligations. The so-called debt limit battle is freighted with politics, especially for tea partiers, and there's a widespread expectation that Obama is going to have to accept significantly more in spending cuts in that upcoming round.

There are few details available regarding the pending appropriations bill, which would fund the day-to-day operating budgets of federal agencies through the Sept. 30 end of the budget year. It's still being put in legislative form.

But aides did say that the measure avoids outright cuts to the IRS, though Obama's hoped-for increases were denied. Cuts to Pell Grants for college students from low-income families were restored, as were cuts to health research and Obama's "Race to the Top" initiative that provides grants to better-performing schools. Large cuts to foreign aid were tamed.

Anti-abortion lawmakers did succeed in winning a provision to block taxpayer-funded abortions in the District of Columbia. And Boehner won funding for a personal initiative to provide federally funded vouchers for District of Columbia students to attend private schools.

Some $18 billion of the spending cuts involve cuts to so-called mandatory programs whose budgets run largely on autopilot. To the dismay of budget purists, these cuts often involve phantom savings allowed under the decidedly arcane rules of congressional budgeting. They include mopping up $2.5 billion in unused money from federal highway programs and $5 billion in fudged savings from capping payments from a Justice Department trust fund for crime victims

Both ideas officially "score" as savings that could be used to pay for spending elsewhere in the day-to-day budgets of domestic agencies. But they have little impact, if any, on the deficit.

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

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