Budget Cuts

By David Lawder and Caren Bohan
WASHINGTON | Fri Jul 26, 2013 1:05am EDT

(Reuters) – Another dramatic showdown between Republicans and the White House over federal spending looks inevitable this fall, with scary talk of government shutdowns and default on government debt.

While Capitol Hill analysts are not predicting catastrophe, they have several reasons to worry that the conflict just weeks away could be even worse than usual.

The timing is particularly bad, they say, because the political climate in Washington is unusually frayed by a host of tangential issues not present in previous battles.

Obama and Congress face two fiscal deadlines in quick succession. They must agree by October 1 on a stop-gap measure to keep the government funded or face a shutdown.

And in early November, Congress must raise the legal limit on the country’s borrowing authority or risk an unprecedented default on the government’s debt, a much more consequential event than a shutdown because of its potential to cause chaos in financial markets and harm the economy.

This time around, the Republicans, who control the U.S. House of Representatives, are expected to use the deadlines as they have in the past as leverage to extract spending reductions from President Barack Obama.

With the two dates so close, some members of Congress, including some Republican leaders, think they could influence each other, and not for the better.

There’s a chance, for example, that conservatives, particularly on the eve of the 2014 midterm election campaign, may be willing to hold out for a shutdown in order to show they mean business in advance of the debt limit fight.

Analysts also fear that if conservatives lose the battle over government funding – and get no concessions from Democrats – they will be all the more determined to take a hard line on the debt ceiling.

Conservative anger at Obama has risen in the last few months, thanks in part to the controversy surrounding the Internal Revenue Service’s targeting of conservative groups seeking tax-exempt status and the implementation of Obamacare, the president’s signature health care reform law, which starts officially on October 1, just as the fiscal battles intensify.

Washington is gearing up for another showdown over the budget even though two prior confrontations resulted in political damage for both Obama and congressional Republicans.

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