Congress nears deal to avert government shutdown – for now

With a government shutdown looming by week’s end, House Republicans are closing in on a compromise that would push back the deadline to pass a federal budget by two weeks.

Government funding is set to expire Friday, yet Republicans and Democrats remain far from any budget deal: House Republicans passed a budget on Feb. 19 that included $62 billion in cuts, but Senate Democrats are flatly refusing even to consider the bill.

The compromise being considered by House Republicans is to pass a short-term spending bill that would give Congress an additional two weeks to negotiate but also includes $4 billion in cuts – keeping them on target for their goal of $60 billion in cuts this fiscal year.

White House Press Secretary Jay Carney said the proposal suggested "we're moving in the right direction." The proposed cuts come from programs already targeted for elimination by the White House. These include: additional highway spending ($650 million), reading instruction ($250 million), competitive grants to lower class size ($66 million), and $2.7 billion in cuts to member “earmark” projects.

But Senate Democrats caution that the proposed compromise in effect has picked the low-hanging fruit. “They will run out of consensus cuts before very long,” says a Senate Democratic aide.

Status quo, pre-stimulus

House Republicans aim to get government spending back to where it was before the passage of the stimulus package in 2009. But leadership also says it wants to avoid a government shutdown.

“Obviously, our focus is very much on making sure we can keep this government running and at the same time cut government spending,” said House majority leader Eric Cantor at a briefing with reporters on Monday.

Senate majority leader Harry Reid (D) of Nevada has refused to allow a vote on the budget passed by the House, saying that such “draconian cuts” do not have the votes to pass in the Senate. Democrats cite a report released Monday by Mark Zandi, chief economist at Moody’s Analytics, that claims that the GOP plan will destroy 700,000 jobs through 2012.

"Significant government spending restraint is vital, but given the still-halting economic recovery, it would be counterproductive for that restraint to begin until the economy is creating enough jobs to bring down the still very high unemployment rate," wrote Mr. Zandi, also a former adviser to GOP presidential nominee John McCain.

'What kind of jobs?'

The House majority leader challenged those findings Monday. “What kind of jobs?” said Mr. Cantor, responding to a question at the briefing. If these are mainly government jobs, “do you want government to continue to fund jobs that we can’t afford? That’s the real question.”

“We are borrowing 20 cents of every dollar. That is an unsustainable course,” he added.

The proposed short-term measure has better prospects. “We’re reviewing it still,” says Brian Fuller, a spokesman for the Senate Democratic caucus. Only last week, Senate Democrats had said that they would not bring to the floor a spending bill for this fiscal year with any cuts.

It the House passes the measure, as expected, it could be on the floor of the Senate by mid-week, in time to meet the Friday deadline. House freshmen – a critical mass of 87 newcomers, many inspired by the tea party movement – are so far backing the compromise, while pressing for leaders to urge deeper spending cuts.