WRAPUP 3-U.S. budget deal avoids shutdown, fight ahead

* Bigger budget fights ahead

* Deal brings record $38 billion in spending cuts
(Updates with visit to Lincoln Memorial, quotes)

By Patricia Zengerle and Jeff Mason

WASHINGTON, April 9 (Reuters) – President Barack Obama
signed a short-term spending bill on Saturday that averted a
government shutdown, formalizing a compromise deal with
Republicans that paves the way for more — and bigger —
deficit-reduction fights to come.

With just over an hour to spare before a midnight deadline,
Obama’s Democrats and opposition Republicans agreed on Friday
to a budget compromise that will cut about $38 billion in
spending for the last six months of this fiscal year.

After signing the stopgap spending bill to keep the federal
government running until the deal can be formally approved in
the coming days, Obama underscored the fact that Washington was
open with a surprise visit to the Lincoln Memorial.

“I just wanted to say … that because Congress was able to
settle its difference, that’s why this place is open today and
everybody’s able to enjoy their visit,” he told cheering
tourists from the monument steps.

Friday night’s agreement — after a furious battle over
spending and social issues like abortion rights — averted a
shutdown that would have weakened the U.S. economic recovery,
forced furloughs for some 800,000 federal employees, delayed
paychecks for troops in Afghanistan and Iraq, and closed
national parks and monuments.

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Obama said the pact involved painful compromises. “I would
not have made these cuts in better circumstances. But we also
prevented this important debate from being overtaken by
politics and unrelated disagreements on social issues,” he said
in his weekly radio address.

DEFICIT WOES

The deal angered some Democrats, who said it unfairly
punished working-class Americans as they deal with the
lingering effects of a steep economic recession, after Obama
agreed to a deal in December that cut taxes for the rich.

“These things are bad. I think it’s also bad for the
American economy,” Representative Eliot Engel said on MSNBC.

Republicans lost no time in stressing the deal did not mean
they were ready to compromise as the government grapples with a
deficit expected to hit $1.4 trillion this year.

“Washington has not been telling you the truth about the
magnitude of the problems we are facing,” Representative Paul
Ryan, who has announced a budget plan to save $6 trillion over
the next decade, partly by cutting government-run health
programs for the poor and elderly, said in the Republicans’
Saturday radio address.

The White House made clear it was looking ahead to the next
funding fights. Senior administration officials told reporters
the deal was a sign the parties could work together on issues
like increasing the debt ceiling and cutting the deficit.

“(There’s a) very important message tonight to the American
people and hope for the future that our leaders can come
together and … produce what is the biggest annual spending
cut in the history of the country,” one said.

The government could hit the current $14.3 trillion limit
on its borrowing authority by mid-May and will need Congress to
approve another increase in that debt ceiling.

Congress must also approve a budget for the next fiscal
year, a fight likely to last well into the 2012 campaign season
as Obama seeks a second term.

PUBLIC FRUSTRATION, AMBIVALENCE ON CUTS

Tourists strolling through Washington said they were
relieved the government had not closed.

“We would not have gone in to check out the Smithsonian
museum before coming over here to see the cherry blossoms if
everything was closed,” said Greg Kohler, 32, of Harrisburg,
Pennsylvania, as he walked with his wife and baby under the
capital’s famed cherry blossom trees.

But Kathy Nelson, 59, a visitor from Huntsville, Alabama,
walking near the White House, said a shutdown would have been a
needed wake-up call for the country to deal with its debt.

Americans have notoriously mixed feelings about deficits —
they want low taxes, but resist talk of cuts in government
healthcare and Social Security pension programs.

As Democrats and Republicans traded blame and a shutdown
loomed, the biggest incentive for a deal might have been the
risks that failure would have posed for Obama and other
politicians of both parties just as the 2012 presidential
election campaign gathers steam.

The spending cut was a victory for Republicans who won
control of the House of Representatives in November on promises
to scale back government. House Speaker John Boehner came under
intense pressure from Tea Party movement conservatives inside
his party to take an even tougher stance.

Obama and the Democrats were able to beat back a Republican
effort to block birth control funding to Planned Parenthood,
because the family planning organization also provides
abortions — although not with public money.

The deal did include language banning the use of federal
government funds for abortions in Washington, the capital city
that comes largely under Congress’ jurisdiction.
(Additional reporting by Emily Stephenson and Margaret
Chadbourn; Editing by Vicki Allen and Peter Cooney)

WRAPUP 3-U.S. budget deal avoids shutdown, fight ahead