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Hopes for deal to avoid cash crunch


BARACK Obama is struggling to avert a government shutdown tomorrow as party leaders in the US congress baulk at a compromise on federal budget spending cuts.
With time running out before government funding expires, unless congress passes a budget, Republicans and Democrats worked through the night to reach a deal.

The President intervened for the second time, calling Republican House of Representatives Speaker John Boehner and Democrat Senate leader Harry Reid to a late-night meeting at the White House yesterday.
The meeting, also attended by Vice-President Joe Biden, failed to reach an outcome but Mr Obama said they had narrowed the issues.
The US political establishment is on edge over the prospect of a shutdown - the first in 15 years - that would close all non-essential government services and stop payment of public servants.The congress has been at a stalemate over the 2011 budget since last year, with the conservative Republican Party pushing for deeper budget cuts than Mr Obama's left-leaning Democratic Party is willing to accept, and government funding sustained only by temporary extensions.
Mr Obama, who has threatened to veto a Republican proposal for a further week of stopgap funding, said after the latest White House talks it would be "inexcusable" if both sides could not reach an agreement before the deadline of midnight on Friday, US time.
Despite having sided with his party's view that no further cuts were possible after big concessions, Mr Obama said he remained confident agreement could be reached.
The opposing sides are haggling over a relatively small amount of the total - about $US7 billion ($6.74bn) in disputed funding cuts out of a $US3.5 trillion budget that has only six months to run, and was meant to be passed last year.
The issue has come down to a threshold battle not only over money but also for political control as Mr Boehner presses for the maximum he can extract from Senator Reid and Mr Obama.
"We are going to fight for the largest spending cuts we can get, and the policy riders that were attached to them, because we believe that cutting spending will lead to a better environment for job creation," the house Speaker said yesterday.
The added pressure for Mr Boehner is a new group of house Republicans elected in November, many of them with support from the ultra-conservative Tea Party movement, who are demanding bigger cuts and appear unconcerned about the consequences of reduced government services from the cuts, or a shutdown if no deal is agreed.
If Mr Boehner is seen to kowtow to the Democrats so early in his term as Speaker after his party scored a big majority in November's mid-term elections, his position could be on the line.
Legislation has already been passed in the Republican-controlled house seeking $US61bn in budget cuts.

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