UPDATE 1-Obama issues warning about US government shutdown

* Puts pressure on Republicans to compromise

* Cash runs out April 8 without a deal with Congress

* Speaker Boehner says he doesn’t want a shutdown
(Adds Reid comment, details)

By Steve Holland and Emily Stephenson

WASHINGTON, April 1 (Reuters) – President Barack Obama
warned U.S. lawmakers on Friday that it would be the “height of
irresponsibility” to shut down the government over a spending
battle, pressuring Republicans not to pursue deeper cuts.

Obama’s comments set the stage for an attempt to blame
Republicans should congressional negotiations collapse and the
U.S. government runs out of cash when a short-term funding
measure expires on April 8.

“We know that a compromise is within reach. And we also
know that if these budget negotiations break down, it could
shut down the government and jeopardize our economic recovery,”
Obama said at a UPS shipping facility in Landover, Maryland.

Obama weighed in at a sensitive time in the negotiations.

The talks could still fall apart, but neither party is
eager to cause a government shutdown that could lead to
thousands of layoffs when voters are nervous about the shaky
economic recovery and rising gas prices brought on by political
unrest in the Middle East.

Both sides are believed to have tentatively agreed to $33
billion in cuts but are haggling over where the budget knife
should fall.

“I’m happy to say that negotiations toward a compromise are
moving forward. Not as fast as I would like, but they are
moving forward,” Senate Democratic Leader Harry Reid said on a
conference call.

Democrats want to cut defense spending and some benefit
programs that normally lie beyond the reach of the annual
budget process, and protect education and scientific research
programs. Republicans hope to deny funding to some of Obama’s
top priorities, such as Obama’s healthcare overhaul and
greenhouse-gas regulation.

A $33 billion cut would represent a big victory for
Republicans, as Obama had initially proposed a budget that
would have increased spending by $41 billion but was never
enacted.

But newly elected Tea Party conservatives in the House of
Representatives want deeper cuts, presenting a challenge to
House Speaker John Boehner.

And that is just for the budget for the fiscal year that
ends Sept. 30. A bigger battle may be looming for the 2012
budget as Republicans eye further spending cuts, tax cuts and a
revamp of big-ticket benefits like the Medicaid program for the
poor and disabled. [ID:nN01295478]

BOEHNER WARNS AGAINST SHUTDOWN

Boehner said on Friday that a shutdown would undermine
Republican goals to cut government spending.

“Let’s all be honest, if you shut the government down,
it’ll end up costing more than you save because you interrupt
contracts. There are a lot of problems with the idea of
shutting the government. It is not the goal. The goal is to cut
spending,” Boehner told a news conference.

On Friday, several House Republicans said they would resist
meeting Democrats in the middle on the size of the cut as they
stood on the steps of the Senate. They want to stick to $61
billion in cuts that have already passed the House.

“Anything less than $61 billion is an insult to the
problem,” said Republican Representative Paul Broun.

The size of the package could change, as Republicans are
inclined to push for deeper cuts in return for dropping
measures that would block funding for birth control,
environmental regulation and other agency activities.

Dozens of such restrictions are included in the Republican
plan, and some of them will probably make it into the final
bill.

“Let’s not shut down the government on a fight over some
bumper sticker issue that may have been around for the last 10
or 20 years,” Democratic Senator Dick Durbin said.

Congressional Democrats who saw Republicans punished by
voters after a 1995 shutdown when Democrat Bill Clinton was
president are eager to place the blame on Republicans once
again.

Until Friday, Obama had largely resisted weighing in on the
battle.

Obama chose to do so because a Labor Department report
showed a slight decline in the U.S. jobless rate to 8.8 percent
and he felt it important to comment on the possibility of a
shutdown that he believes could hinder the fragile recovery,
White House spokesman Jay Carney said.

Democratic and Republican staffers were expected to work
through the weekend to lay the legislative groundwork for the
deal. Boehner said he would not be in town.
(Additional reporting by Andy Sullivan, David Alexander,
Thomas Ferraro, Richard Cowan and Matt Spetalnick; Editing by
Paul Simao)

UPDATE 1-Obama issues warning about US government shutdown