Republicans want to axe £75m 'abortion spending', with US economic recovery at risk unless deal is struck
Barack Obama has been locked in negotiations with Republicans to avoid a federal government shutdown that would trigger chaos across the US and could set back the fragile economic recovery.
The two sides were nearing a deal but were struggling to close it as the Republicans sought to squeeze out further concessions. With the government running out of money because of the failure of Congress to agree on budget spending, a shutdown was scheduled to begin early Saturday morning. The Republican House Speaker, John Boehner, holding out for more, told reporters: "We will not roll over."
The main sticking point appears to be ideological, with the Republicans wanting to withdraw $75m funding for Planned Parenthood, which provides health advice and testing for women at 800 health centres. The Republicans claim the handout is money for abortion; the Democrats insist the agency provides an essential health service for poor women in remote areas.
Obama had told Boehner on Thursday night at the White House he wanted a deal by Friday morning but the morning passed and no deal was in sight.
The president had planned a visit to Indiana on Friday to talk about jobs and energy but cancelled this because of the crisis. He also postponed a family break to Virginia's Williamsburg, a sort of educational theme park of the colonial era.
Although the Democrats and Republicans have narrowed their differences over the past week, Boehner and the Democratic leader of the Senate, Harry Reid, could not agree in public on Friday over what the obstacles to a deal were. Reid said the men had agreed on the sum to be cut from this year's budget and the only issue was Republican insistence that the cuts include abortion providers. He described a shutdown as devastating.
Boehner said a deal on money had yet to be reached. "There's only one reason that we do not have an agreement as yet, and that issue is spending. We are close to a resolution on the policy issues. But I think the American people deserve to know: when will the White House and when will Senate Democrats get serious about cutting spending?," he said. He later qualified this, saying they had reached agreement on "almost all" policy issues.
The Democrats had agreed to $33bn (£20bn) in spending cuts for the budget until September but the Republicans are seeking $41bn. The two sides on Thursday appeared to have settled for $38bn.
Tens of thousands of officials across America were preparing for a government shutdown in case Democrats and Republicans fail to reach a last-minute compromise. The immediate impact would be felt by tourists hoping to visit some of America's most popular attractions, the 400 national parks, monuments and historic sites that include the Grand Canyon to the Statue of Liberty. Economists predict the closure could cost about $8bn a week.
Park rangers have closure notices ready for posting at entrances and anyone camping out in the national parks would be told to leave. These include about 1,000 civil war re-enactors planning to camp at South Carolina's Fort Sumter to mark the 150th anniversary of the first shots of the conflict being fired on 12 April.
About 800,000 federal employees will be suspended without pay from Monday, more than 1 million troops at home and abroad will not receive pay, tax offices will be disrupted and in DC rubbish collection, parking fines and other services will cease. Pollution checks by the Environmental Protection Agency (EPA) will stop, as will mine and safety inspections and routine monitoring of Wall Street transactions.
The White House, Congress, the Pentagon and hundreds of other bodies will reduce staff. Notices are going out dividing workers into "essential" and "non-essential" categories, the latter label a blow to many in status-conscious Washington.
Staff not working are being told not to breach the shutdown by using their BlackBerries – about one million staff have government-issued ones – and laptops.
Queues have been growing at passport offices as tourists and people travelling for business or other reasons put in their applications before the proposed closedown. Passport officials said these would be processed but from next week it would be an emergency-only service. Postal services will continue, as will air-traffic control, border protection, food-safety inspections and welfare payments. Members of Congress, to the annoyance of many voters, would also continue to be paid during any shutdown.
The defence secretary, Robert Gates, on a trip to Iraq told troops they would be paid for this week but would have to wait for the budget dispute to be resolved before they would receive further payment. Civilian employees suspended have been told that they will not be paid.
Congress after the last shutdown in 1996 voted to compensate people for lost pay but there is no guarantee they will do so this time round. A Democratic congressman, Jim Moran, citing Republican opposition to federal spending, said: "There will be no reimbursement."
The EPA would reduce, or even cease, its monitoring of polluters. Loans to small businesses and those seeking to buy homes would also be hit by a shutdown. Courts would continue as normal for a week or two before suspending 'non-essential' support staff.
Approvals for new construction, including housing, will cease. The National Institutes of Health Clinical Centre will not take new patients.
The dispute offers a glimpse of bigger battles to come over the 2012 budget, in which Republicans are likely to seek more stringent cuts. Michele Bachmann, the Republican congresswoman popular with the Tea Party movement, told CNN: "We will see the bigger fight in 2012, including the defunding of Obmacare and getting at a real budget spending."
A Gallup poll published has shown 58% of those surveyed favoured a compromise, with 33% backing the Republicans to hold out.