Lawmakers Agree on $1 Trillion Deal to Avert Shutdown

Posted December 16th, 2011 at 12:25 am (UTC-5)
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U.S. lawmakers say they have reached deal to fund the federal government through the end of the fiscal year, just a day before parts of the government would have been forced to stop operating.

Lawmakers announced the $1 trillion deal late Thursday to fund government operations for the rest of the 2012 fiscal year. But negotiators are still working on a deal to extend a payroll tax cut that President Barack Obama said will keep 160 million working Americans from seeing a tax increase on January 1.

At issue is how to make up for the shortfall created by that tax cut. Democrats have argued for an increase to a tax on people who earn $1 million or more, but Republicans refused to allow any tax increases. Sources Thursday said the new deal will not include the so-called “millionaire's tax.”

The top Democrat in the Senate, Harry Reid, said negotiators were working on a two-month extension as a back up plan, in case lawmakers were unable to agree on a year-long plan.

Both the Senate and the House of Representatives must still vote on the budget bill Friday, before the current stopgap funding for the federal government runs out at midnight.

U.S. President Barack Obama Thursday had pressed lawmakers to extend the payroll tax cut, saying the federal government should not shut down because Congress cannot agree on a tax issue.

In August, wrangling over budget cuts and taxes led the U.S. government to come within hours of being unable to pay its debts and the country's credit rating was downgraded for the first time in history.

The government also came within hours of shutting down because of stalled budget negotiations in April.