Obama signs spending bill after skirting shutdown

WASHINGTON, April 9, 2011 (AFP) - President Barack Obama on Saturday signed into law a temporary spending bill averting a US government shutdown and ending -- for now -- a budget row between the Democrats and their newly empowered Republican foes.

Party leaders clinched the agreement, including $38.5 billion of extra spending cuts, after intense bargaining, barely an hour before the federal government effectively ran out of money at midnight Friday.

AFP - US President Barack Obama (C) visits the Lincoln Memorial in Washington, DC, on April 9, 2011.

The showdown was just the first bruising engagement in a string of likely clashes between Obama's Democrats and the Republicans, boosted by a new crop of conservative Tea Party movement lawmakers, as the president fires up his 2012 reelection bid.

Obama on Saturday made a surprise visit to the Lincoln Memorial -- among the many national sites that would have closed in a government shutdown -- to briefly talk to tourists.

"I just wanted to say, real quick, that because Congress was able to settle its differences, that's why this place is open today and everybody is able to enjoy their visit," Obama said after bounding up the steps of the memorial honoring America's 16th president.

"And that's the kind of future cooperation I hope we have going forward," he added.

But that might not be the case. Some Republicans are venting frustration at having not extracted more from Democrats.

"People are angry across the country that we didn't get a better deal," congresswoman Michele Bachmann, a Tea Party favorite, told Fox News, adding that she was likely to vote against a deal for the remaining five months if more spending cuts are not included.

Lawmakers on both sides made clear that the latest battle was an early confrontation in a broader budget war.

"This was not even act one. This was just the overture," Democratic Representative Steve Israel told CNN on Saturday.

And looming is another spending issue, with international implications: Obama's request to raise Washington's ability to borrow. It's an issue that has inflamed Tea Party faithful and has international investors worried about US default.

"Senate Republicans and House Republicans -- and I hope many Democrats as well -- are going to say 'Mr President, in order to raise the debt ceiling we need to do something significant about the debt,'" Senate Minority Leader Mitch McConnell said.

Republicans want to tie an debt limit increase to massive spending cuts. Federal Reserve Chairman Ben Bernanke said in recent congressional testimony that a default would be "extremely dangerous" and would end hopes of an economic recovery.

The budget agreement included a stopgap funding measure that lawmakers in both chambers raced to approve before midnight to give negotiators until Thursday to finalize the overall deal, which funds the government through the fiscal year ending September 30.

The Senate passed the temporary measure by voice vote, the House by a 348-70 margin at 12:39 am (0439 GMT) Saturday.

Obama boasted that cooperation born of difficult compromises yielded "the biggest annual spending cut in history" at a time when Washington faced a projected annual shortfall of $1.65 trillion.

"Some of the cuts we agreed to will be painful. Programs people rely on will be cut back. Needed infrastructure projects will be delayed," the president said.

He continued to sell the deal to the public Saturday, saying in his weekly radio address that "beginning to live within our means is the only way to protect the investments that will help America compete for new jobs."

House Speaker John Boehner told his restive Republican caucus behind closed doors he had sealed an agreement with the White House.

"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," Boehner said afterward.

Democratic Senate Majority Leader Harry Reid, his party's lead negotiator, described a "grueling process. We didn't do it at this late hour for drama. We did it because it has been hard to arrive at this point."

Anticipating a possible insurrection, Boehner told Republicans "this is the best deal we could get out of them," according to two officials who attended the emotional gathering.

Earlier this month Republican Paul Ryan, chairman of the House Budget Committee, unveiled a plan to slash government spending by some $6 trillion over the next decade, in a direct rebuke to what he denounced as Obama's free-spending ways.

"Washington has not been telling you about the truth of the magnitude of the problem we are facing," Ryan said Saturday, suggesting a titanic clash over government spending was brewing.

"Each year the policy makers kick this can down the road," he said.

Prior to the 11th-hour agreement, Obama had warned that a prolonged shutdown could jeopardize America's slow recovery from the worst economic crisis since the 1930s Great Depression.

A shutdown would have seen around 800,000 federal employees temporarily laid off, paychecks for combat soldiers delayed and national parks and monuments closed.

But operations vital to national security such as the war in Afghanistan, border services and air traffic controllers would have gone on as normal.

The overall spending accord removed what Democrats had described as the biggest obstacle to a deal: a Republican-crafted measure stripping federal funding from the Planned Parenthood clinics that provide abortions.

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