Painful times ahead for US, warns Obama

US President Barack Obama warned Americans yesterday that they are facing painful times after Democrats and Republicans struck a deal that will bring in the biggest annual spending cuts in the country's history.

The last-minute agreement averted the threat of a government shutdown that would have brought chaos - but it also removed US$38 billion ($48.5 billion) of spending intended for important federal programmes.

"Some of the cuts we agreed to will be painful. Programmes people rely on will be cut back. Needed infrastructure projects will be delayed. I would not have made these cuts in better circumstances," the President said.

However, he welcomed the agreement and said the country had to learn to live within its financial means.

"Reducing spending while still investing in the future is just common sense. It is what families do in tough times. They sacrifice where they can, even if it's hard, to afford what is really important."

Though the President struck a conciliatory tone, the period leading up to the agreement had resulted in a remarkable spectacle of political infighting and squabbling that looked likely to bring the federal Government to a grinding halt for the first time since 1994.

Emboldened by their victory in last year's mid-term elections and propelled by their Tea Party base, the Republicans in Congress had refused to pass this year's Budget unless it introduced billions of dollars of cuts.

Leading Republicans had wanted far more cuts than the US$38 billion eventually agreed.

Democrats fought back, especially as the eventual sticking point appeared to focus not so much on spending, but more on federal funding around social issues such as abortion.

Republicans backed away from their demands for spending reductions in areas opposed by social conservatives and reached an agreement to keep the government open.

Many senior Republicans had urged the party's leadership to avoid closing the government because they feared a repeat of 1995 - when a Republican-led shutdown turned voters against the party, allowing Bill Clinton to win re-election as President in 1996.

In the event of a shutdown, hundreds of thousands of workers would have been laid off, national parks would have shut and members of the military serving in wars abroad would not have been paid. Just the threat of a shutdown last week had slowed much vital government work to a crawl.

John Boehner, the Republican Speaker of the House of Representatives, said: "We fought to keep government spending down because it really will, in fact, help create a better environment for job creators in our country."

His opponent in the talks, Harry Reid, the Democratic Senate leader, appeared less pleased, but was relieved that an agreement was reached.

"We didn't do it at this late hour for drama. We did it because it has been hard to arrive at this point."

Just hours before, Reid described Republican efforts to strip spending away from the Planned Parenthood organisation as indefensible and truly shameful. But those efforts failed, as Obama acknowledged.

"[We] prevented this important debate being overtaken by politics and unrelated disagreements on social issues," he said.

The deal will be voted on this week.

When it passes, the agreement will ensure that the Government is funded through the end of the financial year.

However, battles over spending are likely to continue, especially as next year's presidential election draws closer. Republican leaders have vowed to push for deeper cuts.

- OBSERVER