Tea Party fears cloud budget talks, Democrats say

* Democrats say Republicans walked away from deal

* Deal needs to be in place this week to avoid shutdown

By Andy Sullivan

WASHINGTON, March 29 (Reuters) – With time running short on
a deal to keep the U.S. government operating, Democrats accused
Republicans on Tuesday of catering to a conservative base
rather than working toward a compromise that would cut spending
and avoid a shutdown.

The two sides are battling over spending levels for the
current fiscal year, which is nearly halfway over. Republicans
hope to keep a campaign promise to scale back the government,
while Democrats say that sharp spending cuts would hurt the
economic recovery.

As lawmakers returned after a one-week recess, Democrats
said that Republicans had backed away from a possible deal to
cut roughly $30 billion because they are afraid of angering
grass-roots Tea Party activists.

“We were right on the verge of a potential breakthrough and
they moved the goalposts,” Democratic Senator Charles Schumer
said on the Senate floor. “At this point the only hurdle left
to a bipartisan deal, the only obstacle in the way, is the Tea
Party.”

Tea Party activists, who plan a Thursday rally at the
Capitol, are indeed pushing Republicans to reject a
compromise.

A spokesman for House Speaker John Boehner said Schumer’s
account was inaccurate.

“He is making up fairy tales trying to derail serious
discussions on funding the government and cutting spending,
because he believes his party would benefit from a government
shutdown,” Boehner spokesman Michael Steel said.

The government is operating on an extension of last year’s
budget because lawmakers have not been able to agree on
spending levels for the fiscal year which began Oct. 1.

Congress has approved six separate stopgap measures to keep
the government running while talks continue, but many lawmakers
say they won’t support another extension.

TIME RUNNING OUT

The current stopgap measure will expire on April 8, but
aides say a deal needs to be in place within the next few days
in order to ensure it has enough time to pass Congress.

Both parties acknowledge the need to bring down budget
deficits that have hovered around 10 percent of GDP in recent
years due to the recession, tax cuts and wars in Iraq and
Afghanistan.

The Republican-controlled House of Representatives has
passed a bill that would cut $61 billion and prevent Obama from
spending money on his signature healthcare overhaul,
greenhouse-gas regulations, and other priorities. That measure
failed in the Democratic-controlled Senate.

Senate Democrats have floated a proposal that would cut $20
billion on top of $10 billion in cuts that have already been
enacted, meeting the Republicans roughly halfway. But they two
sides are targeting different programs for their cuts, and
Democrats refuse to consider the Republican-backed policy
restrictions.

Obama has also threatened to veto any bill that blocks his
priorities.

Those factors are clouding the ability to agree on a final
spending-cut figure.

“Nothing is decided until everything is decided. The
Democrats actually involved in the negotiations know that,”
Steel said.

The cuts in question would have little impact on the budget
deficit, which is projected to hit $1.4 trillion this year,
because they would spare the benefit programs like Medicare and
Social Security that account for more than half of the $3.7
trillion budget.

House Republicans next week are expected to unveil a budget
for the next fiscal year that proposes to trim Medicare and
other health insurance programs and outline further spending
cuts.

(Editing by Philip Barbara)

Tea Party fears cloud budget talks, Democrats say