8 Apr 2011

Time running out to break US budget deadlock

9:37 pm on 8 April 2011

Talks aimed at avoiding a shutdown of the United States government have broken up with no deal, leaving negotiators just hours to agree on a budget compromise.

Without an agreement on spending for the next six months, money to operate the government will run out at midnight on Friday.

If the administration of President Barack Obama and opposition Republican leaders do not reach a deal on budget cuts, the US government will lose the authority to spend public money and will be forced to shut down non-essential services.

Mr Obama said progress had been made and he remained hopeful a that deal would be reached.

Agencies such as the Internal Revenue Service would have to begin a partial shutdown, although vital services such as national defence, law enforcement, emergency medical care and air traffic control would continue.

Republicans and Democrats need to resolve their differences, or pass a temporary funding bill.

Mr Obama has held four face-to-face meetings with the Republican and Democratic congressional leaders in the past three days and said a few "difficult issues" still had to be resolved, Reuters reports.

The negotiations have aimed to cut spending in the range of $US33 billion to $US40 billion for the rest of this year in an overall federal budget of about $US3.7 trillion.

A government shutdown would affect 800,000 workers, potentially put a crimp on the US economic recovery and carry political risks for Democrats and Republicans.

Public servants would be temporarily laid off, soldiers would not be paid and national parks and museums would close.