US Govt. on the Verge of Shutting Down in 12 Hours

With twelve hours to go before a midnight shutdown, middle-of-the-night talks in the Capitol between the White House, Senate Democrats, and House Republicans had failed to produce an agreement. A shutdown would have furloughed hundreds of thousands of federal workers, closed national parks, disrupted medical research, and slowed everything from tax refunds to passport processing — a wound to a fragile economic recovery.

The nominal hang-up was the size of spending cuts in the bill to fund the government through September, when the budget year ended. Democrats had moved toward roughly $34.5 billion in reductions — more than the $33 billion earlier on the table, less than the $40 billion House Speaker John Boehner had floated. But Senate Majority Leader Harry Reid insisted the deadlock was really about the GOP's social-policy riders: denying federal dollars to Planned Parenthood and curbing EPA anti-pollution rules.

"It's an ideological battle," Reid said. "It has nothing to do with the fiscal integrity of this country."

There were hints of flexibility on both sides. Republicans floated giving governors discretion over family-planning funds — a move that would have severed the federal link to Planned Parenthood. Obama, who had postponed a Friday trip to Indiana, said he would sign a short-term extension to buy more negotiating time. House Minority Whip Steny Hoyer said talks were "70 percent of the way on the numbers."

In the end, the brinkmanship collapsed into a deal late Friday night — $38.5 billion in cuts, with the Planned Parenthood rider dropped — and the government stayed open. The episode was a preview: with dozens of tea-party-backed freshmen in the new GOP House majority, the 1990s shutdowns that had damaged Republicans and helped Bill Clinton were on everyone's mind.

Reporting: The Associated Press.