7:17 PM
WASHINGTON |
WASHINGTON (Reuters) - President Barack Obama held an urgent round of budget talks with U.S. congressional leaders on Wednesday evening to try to avert a government shutdown.
With the clock ticking toward a midnight Friday deadline, Obama met at the White House with Republican House of Representatives Speaker John Boehner, and Senate Majority Leader Harry Reid, a Democrat.
Republicans and Democrats have said negotiators were making progress on a compromise that would fund government operations past Friday's deadline and keep more than 800,000 workers in their jobs.
The two parties remain at odds over about $10 billion in spending cuts, according to a Democratic aide.
The final size of the cuts for the rest of this fiscal year will likely end up closer to the $33 billion Democrats have agreed on than the Republicans' $40 billion target, the aide said.
A government shutdown, the first in 15 years, would ripple through an economy still recovering from the worst recession since the 1930s. Obama urged both parties to compromise and said failure to reach agreement would hurt the economy just as it was gaining momentum.
"Companies don't like uncertainty, and if they start seeing that suddenly we may have a shutdown of our government, that could halt momentum, right when we need to build it up," he said at a town-hall style event in Pennsylvania earlier.
A FAILURE OF LEADERSHIP
Boehner criticized Obama for a failure of leadership in the budget showdown and said the House on Thursday would consider a short-term bill to cut an additional $12 billion in spending and fund the government for another week while negotiations continued.
Obama and many of his fellow Democrats oppose another short-term extension. Some Republicans said it could serve as a legislative vehicle for a final budget deal.
"That's not just bad policy, that's a fantasy," Reid said of the temporary extension. He said it would only put off the tough choices needed to reach a deal on the budget.
The White House painted a bleak picture of the potential impact of a government shutdown, saying it could hurt recovery in the housing market and spark reactions ranging from the closure of national parks to the suspension of the weekend cherry blossom parade in the capital.
A senior administration official told reporters the processing of some tax refunds and audits, as well as small business loans would be halted, and operations of the Federal Housing Administration would be curbed.
"Having the FHA not be able to guarantee loans during this period will have a significant impact if we shut down on the housing market, which is very fragile," the official said.
The investment firm Goldman Sachs estimated a government shutdown lasting more than a week could cost the economy $8 billion in missed federal spending, dragging down growth.
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