Still no deal.
A late-night meeting with House and Senate leaders Thursday failed to break the budget deadlock with hours to go before a midnight deadline on a partial government shutdown.
President Obama huddled with Democratic Senate Majority Leader Harry Reid and Republican House of Representatives Speaker John Boehner at the White House twice Thursday and said he hoped to be able to announce a deal Friday but "there's no certainty yet."
The president told Boehner and Reid that he expected an answer in the morning.
With the economy just beginning to create jobs in large numbers, Obama said, a shutdown would damage the recovery by putting government employees out of work. "For us to go backwards because Washington couldn't get its act together is just unacceptable," he said.
Since taking control of the House in January, Republicans have vowed to slash spending and curb the deficit. Democrats say they are willing to make some cuts, but say the Republicans would cut vital government services and are pushing a social agenda. Republicans have accused the Democrats of using gimmicks instead of making real spending cuts.
The House passed legislation Thursday to fund federal agency operations for yet another week — but also includes $12 billion in additional cuts.
The Republican bill would fund the Defense Department for the rest of the year and, in the event of a shutdown, would ensure that the troops are paid on time. It also contains a so-called policy rider that would deny money for family planning services in Washington, D.C.
House Majority Leader Eric Cantor, who led contentious debate on the measure, said that "we will not leave town until we fulfilled our obligation to cut spending to begin getting our fiscal house in order."
But Democrats like Chris Van Hollen, ranking member of the House Budget Committee, objected to the package.
"They are saying unless you yield to our demands on our very radical social agenda, which is what they are trying to impose through this, we are not going to move forward in helping our troops," Van Hollen said. "That is a cynical ploy — the American people will see right through that."
Although the original budget bill approved by the House in February contained dozens of riders — including provisions defunding Planned Parenthood, environmental regulations and financial industry regulations — Republicans argued that conservatives should continue to fight for the additional riders.
"It seems like liberals in the Senate would rather shut the government down than accept a 2 percent cut in the federal budget," said Rep. Mike Pence (R-IN). "It seems like liberals in the Senate would rather shut the government down so they can continue to borrow money from China to fund the largest abortion provider in America.
Obama has vowed to veto the measure and it is unlikely to reach a vote in the Democratic-controlled Senate.
Obama and the Senate have already acted on two such temporary funding laws, but the White House said it would not go for another stopgap measure because that was "a distraction from the real work" of agreeing on legislation to cover the six months left in the current fiscal year.
The impasse, thought to have been mostly fueled by Republican Tea Party members in the House, is over the conservatives' demand that $61 billion be slashed from what the government needs to stay in operation through Sept. 30. The fight is over what amounts to about 12 percent of all government spending and does not deal with the lion's share — defense, old-age pensions and health care for the elderly and the poor.
While Congressional Democrats and the White House have indicated a willingness to accept spending cuts of nearly $35 billion, they have balked at other Republican demands. Republicans want to strip funding from Planned Parenthood, which provides family planning and medical assistance to women, and money the Environmental Protection Agency uses to regulate greenhouse gases and other pollutants.
"We don't have the time to fight over the Tea Party's extreme social agenda," Reid said.
At the White House, a senior budget official said the impact of a shutdown "will be immediately felt on the economy."
It was unclear whether the day's maneuvering marked attempts by negotiators to gain final concessions before reaching agreement, or represented a significant setback.
Either way, Boehner said this fight was just the first of many likely to come as the conservative majority in the House pursues its goals of reducing the size and scope of government.
"All of us want to get on with the heavy lifting that is going to come right behind it, dealing with the federal debt and putting in place a budget for next year," he said.
House passage of the stopgap measure Thursday angered Boehner's Democratic negotiating counterparts and prompted Obama to call for Republicans to display more urgency on long-term funding.
The Republican measure combines a full-year Pentagon budget with the $12 billion in cuts as the price to keep the government running for yet another week. The vote was seen as a clear moved aimed at shifting political blame to the Democrats if a shutdown occurs.
Last year, when Democrats were in charge of both houses of Congress, they failed to complete the must-pass spending bills. That set the stage for Republicans to pass a measure with $61 billion in cuts that even some Republican appropriators saw as unworkable. It was rejected in the Democratic-controlled Senate.
A government shutdown's impact on the economy would be felt unevenly, said Jeff Zients, deputy director of the Office of Management and Budget. Military troops would not receive their full paychecks, but Social Security recipients would still get monthly pension benefits, he said.
"National parks, national forests and the Smithsonian Institution would all be closed. The NIH [National Institutes of Health] Clinical Center will not take new patients, and no new clinical trials will start," he added in a roll call of expected agency closings.
But the air traffic control system would remain in operation, the emergency management agency would still respond to natural disasters and border security would not be affected.
Two government shutdowns in the mid-1990s damaged Republicans, then new to power in Congress, and helped President Bill Clinton win re-election in 1996.
NPR's Audie Cornish reported from Washington, D.C., for this story, which contains material from The Associated Press. Copyright 2011 National Public Radio. To see more, visit http://www.npr.org/.