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Government Shutdown Averted As Lawmakers Strike Deal

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Senate Majority Leader Harry Reid (D-Nev.) talks to reporters following a political strategy session at the Capitol in Washington, Tuesday, July 17, 2012. (AP Photo/J. Scott Applewhite)
Senate Majority Leader Harry Reid (D-Nev.) talks to reporters following a political strategy session at the Capitol in Washington, Tuesday, July 17, 2012. (AP Photo/J. Scott Applewhite)

WASHINGTON -- Congressional leaders believe they have reached a deal to head off yet another showdown over a possible government shutdown.

A proposed continuing resolution could be passed when Congress returns from its summer break in September, and is intended to carry through until the end of March, when the budget would be taken up by the next Congress. The measure is expected to maintain something close to the funding levels agreed upon last summer in the Budget Control Act, although some Republicans had hoped to cut more.

The federal government runs out of money at the end of its fiscal year on Sept. 30, and Congress has so far failed to pass the funding to keep the vast bureaucracy moving. In recent years, that moment has been subject to all manner of brinksmanship, with both sides using the opportunity to wrangle concessions.

But this year, with the elections coming just a month after the money runs out, both sides seem to have thought better of a high-stakes confrontation. They are already dueling over the looming "fiscal cliff" at the end of the year, when expiring tax cuts and mandatory budget reductions, enacted during last summer's debt showdown, go into effect.

"The agreement will fund the federal government for the next six months," said Senate Majority Leader Harry Reid, suggesting the agreement -- which was not spelled out in detail -- will at least take one problem off the table.

"It'll provide stability for the coming months, it'll be free of riders," Reid added, suggesting House Speaker John Boehner (R-Ohio) has agreed not to let his caucus attach any poison pills.

"During the August district work period, committee members and their staff will write legislation that can be passed by the House and Senate in September and sent to President Obama to be signed into law," said Boehner in a statement.

President Obama has said he would sign off on the six-month budget extension.

"This is very good, because we can resolve these critical issues that directly affect the country as soon as the election's over, and move on to do good things," Reid said. "It puts this out of the way, and that's very important."

In saying that the agreement allows Congress to deal with the more permanent spending and tax questions, Reid seemed to imply that both parties would be free to battle over those issues on the electoral field.

Republicans agreed. "Taking this issue off the table will keep the larger focus on jobs, the economy and President Obama's failed economic policies," said one GOP leadership aide, who is not authorized to discuss strategy. "That's where Republicans win and Democrats lose."

Democrats think they have the upper hand going into the fall, having passed a Senate bill that protects income under $250,000 -- accounting for about 98 percent of the population -- from the expiration of the Bush-era tax cuts at the end of the year.

The House is expected to pass the GOP version this week, extending tax cuts for all, including the wealthy. The argument the Republicans are taking to the polls is that Democrats would raise tax taxes on 1 million small businesses.

UPDATE: 5:00 p.m. -- The White House hailed the deal later:

The agreement reached by House and Senate leadership to fund the government through the first quarter of 2013 is a welcome development, and we are encouraged that both sides have agreed to resolve this issue without delay. The President has made clear that it is essential that the legislation to fund the government adheres to the funding levels agreed to by both parties last year, and not include ideological or extraneous policy riders. The President will work with leaders in both parties to sign a bill that accomplishes these goals.

Michael McAuliff covers Congress and politics for The Huffington Post. Talk to him on Facebook.

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