04/07/2011 10:59 am ET | Updated Jun 07, 2011

Government Shutdown 2011: Inside Wednesday Night's Budget Negotiations

WASHINGTON -- Congressional and Obama administration negotiators worked at the White House until nearly 2 a.m Thursday morning in an effort to finalize a budget deal that would stave off a government shutdown.

But while top aides to Senate Majority Leader Harry Reid (D-Nev.) and House Speaker John Boehner (R-Ohio) -- alongside the White House's director of legislative affairs, Rob Nabors -- were able to come to a closer understanding about the size of spending cuts, a major dispute remains over what type of policy amendments will be allowed in the final bill.

According to a top-ranking Democratic aide, the three parties met last night at the White House for about three and a half hours after President Barack Obama, Reid and Boehner held talks of their own.

The negotiations were productive, the aide said. Democrats agreed to add roughly $1.5 billion in spending cuts to the $33 billion to which they had already agreed. In exchange, they were told that the overall package of cuts would be restructured, with $3 billion in savings drawn from Pentagon spending rather than discretionary programs -- a priority for the Democratic negotiators, the aide said.

The forward movement ended there, however. Boehner spokesman Michael Steel stressed on Thursday morning that "there is no agreement on spending cuts." He also added that the two sides remained apart on policy issues.

Indeed, the Democratic aide, who was briefed on last night's negotiations, said that "talks broke off without resolution last night over riders," the policy amendments that GOP leadership has attached to the spending bill.

Disagreements centered around whether or not the final legislative language should include a revamp of the way federal money is spent on family planning services. Republicans insisted that the system be amended so that funds be sent through state governments instead of directly to organizations -- like Planned Parenthood -- themselves. Democrats countered that such a change would be a de facto means of not just denying abortions but also limiting access to cancer screenings, pap smears, and blood pressure checks, among other things.

The White House, the Democratic aide said, was "very strong" against inclusion of such a rider. On Thursday morning, moreover, both Reid and Sen. Chuck Schumer (D-N.Y.) both issued statements indicating that a budget deal would be blown up if such language was included.

And so negotiators wait to see if the final hurdle can be overcome. Democratic staffers returned from the White House last night and worked on the Hill until 4 a.m. "putting final touches on what had been agreed to on the spending side including the pentagon cuts," the aide said. They are now set to head back to the White House at 1 p.m. Thursday for another in a set of high-stakes meetings.

Jon Ward contributed to this report.