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US Congress battles to agree budget and avoid government 'shutdown'

The Republican House and Democratic Senate are at odds over spending cuts – with a total shutdown a realistic prospect.

The Washington Monument, pictured during its closure in 1995 as part of the last US government shutdown.
The Washington Monument, pictured during its closure in 1995 as part of the last US government shutdown.
Image: DENNIS COOK/AP

THE WHITE HOUSE has insisted that time is running out for the United States Congress to pass a package of measures increasing the legal limit of debt that the country is allowed to run up.

In a letter to the leaders of both Houses of Congress, the Treasury Department said the current limit of $14.29 trillion would be hit earlier than previously thought – with May 1 outlined as a tentative date by which the national debt limit would be breached.

The national debt limit can be thought of as like a credit card limit; if the government cannot negotiate an increase to its limit, it will be forced to simply shut down all non-essential operations in order to cut federal spending.

A more pressing concern, however, is the funding for federal agencies – which the New York Times says could run out as soon as Friday.

The deadlock is made particularly difficult by the fact that the two Houses of Congress – which must both assent to any budget measures, including raising the national debt ceiling – are controlled by the opposing parties, with the House of Representatives led by Republicans while the Senate retains a narrow Democratic majority.

Leaders from both houses will meet Barack Obama later today in an attempt to negotiate a way through the impasse, but preparations are already being made for a shutdown if no deal can be struck.

House Republicans last night kicked off plans on preparing a one-week measure which would introduce $12bn in spending cuts and ensure that the Department of Defence remained fully funded until the end of the current fiscal year on September 30.

Republican leaders have demanded that Obama and the Senate Democrats agree to a larger package of long-term cutbacks, but it remains unclear if the Democrats – who have proposed a $33bn cutback plan of their own – will be willing to accept the proposal, and be seen as playing second fiddle in the discussions despite holding the White House.

The last federal government shutdown occurred in 1995, when president Bill Clinton vetoed a budget package proposed by the Republican-controlled Congress.

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Gavan Reilly

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