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Shutdown looms as Obama budget talks end

WASHINGTON – President Barack Obama held his second late-night summit in a row with his top Republican foe, groping for a budget deal that would avert a US government shutdown just over 24 hours away.

Obama hunkered down in the Oval Office with House of Representatives speaker John Boehner for his second bargaining session of a day of brinksmanship, behind-the-scenes bargaining, and rising political tensions.

The meeting lasted just over an hour, but there was no immediate indication of whether there had been any progress.

If the two key players along with the Senate’s top Democrat Harry Reid fail to come up with a deal by midnight Friday, vast swathes of the US government will close, troops will go without paychecks and national parks will shut.

Boehner, Reid, Obama and Vice President Joe Biden met for Thursday’s second session of talks after an earlier encounter at the White House failed to strike a deal on spending cuts.

A stern-faced Boehner said there was “no agreement on a number, no agreement on the policy issues,” after 90 minutes in the Oval Office with Obama and Vice President Joe Biden.

“We are not there yet,” Boehner said.

The showdown on the scope and nature of huge spending cuts in last year’s budget, through to October 1, is the first big clash between Obama and the new Republican House elected in November, and has huge political ramifications.

As the maneuvering intensified ahead of Friday’s deadline, House Republicans voted through a stop gap spending bill including $12 billion in cuts that would avert a shutdown and take negotiations into another week.

But Obama threatened to veto the measure, should it reach his desk, arguing that it was a purely diversionary tactic to divert attention from the main focus of the high-stakes Oval Office talks.

“This bill is a distraction from the real work that would bring us closer to a reasonable compromise,” his budget office said in a statement that warned a shutdown “would put the nation’s economic recovery in jeopardy.”

The measure, which would fund the US military until October 1 and which Reid has already said has no chance in the Senate, passed in a 247-181 vote.

As well as shutting out government workers, the partial closure of the government would delay pay to soldiers including those in Iraq and Afghanistan, and hurt some Americans counting on annual tax refunds.

Large areas of the government would shut down, federal workers would be ordered to turn off their Blackberries and would be barred by law from volunteering to go to the office unpaid.

With time to reach a deal ticking down, Republican House Majority Leader Eric Cantor notified lawmakers that they would need to report to work on Friday and “keep their schedules for this weekend as flexible as possible.”

“We will not leave town until we have fulfilled our obligation to cut spending, to begin getting our fiscal house in order,” Cantor announced to his colleagues. Any deal reached by Democratic and Republican leaders would need to be endorsed by Congress.

Republicans disputed Democratic claims that both sides had settled on $34.5 billion in cuts and that the White House‘s foes had stalled the talks by insisting that curbs on abortion and a roll-back of environmental rules be part of the final legislation.

“If this government shuts down — and it looks like it’s headed in that direction,” Republicans will be to blame for insisting on “matters that have nothing to do” with spending, charged Reid.

“The numbers are basically there,” Reid said, both sides are “extremely close” after aides worked throughout the night following talks at the White House late Wednesday.

But “I am not nearly as optimistic — and that’s an understatement — as I was 11 hours ago,” because of the rifts over Republican-crafted measures to restrict access to abortion and roll back environment rules, the senator warned.

Both items were included in a House-passed measure to fund the US government to the end of the 2011 fiscal year, September 30, while cutting some $61 billion in government spending.

“We made progress last night at least I thought we did. But when I see what the White House has to offer today, it’s really just more of the same,” Boehner told reporters.

“I think we were closer to a number last night than we were this morning. There are a number of issues that are on the table and any attempt to try to narrow this down to one or two, just would not be accurate,” he said.

The speaker has come under heavy pressure from the archconservative “Tea Party” movement who helped power Republicans to recapture the House and erode the Democratic Senate majority in November elections.

Tea Party members and lawmakers closely aligned with the movement have heaped pressure on Boehner not to compromise with Democrats and said they would rather see the government shutdown than make major concessions.

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