Federal shutdown averted

President Barack Obama and congressional leaders reached a historic, last-minute agreement just before a midnight deadline to slash about $38 billion in federal spending and avert the first federal government shutdown in 15 years.

Obama hailed the deal as "the biggest annual spending cut in history." John Boehner, the Republican speaker of the House of Representatives, said that over the next decade it would cut government spending by $500 billion, and won an ovation from his rank and file — conservative tea party adherents among them.

The deal came together after six grueling weeks and an outbreak of budget brinksmanship over the past few days as the two sides sought to squeeze every drop of advantage in private talks.

"This is historic, what we've done," agreed Democratic Senate Majority Leader Harry Reid, the third man involved in negotiations that ratified a new era of divided government.

Obama, Boehner and Reid announced the agreement less than an hour before government funding was due to run out. The shutdown would have closed national parks and other popular services, though the military would have stayed on duty and other essential operations such as air traffic control would have continued.

The Democrats and the White House rebuffed numerous Republican attempts to curtail the reach of the Environmental Protection Agency and sidetracked their demand to deny federal funds to Planned Parenthood, which provides family planning and other medical services.

Anti-abortion lawmakers did succeed in winning a provision to ban the use of government funds to pay for abortions in the Washington capital district.

For Congress and Obama there are even tougher struggles still ahead — over a Republican budget that would remake entire federal programs and a vote to raise the nation's debt limit.

Republicans intend to pass a 2012 budget through the House next week that calls for sweeping changes in health care entitlement programs and would cut domestic programs deeply in an attempt to gain control over soaring deficits.

And the Treasury has told Congress it must vote to raise the debt limit by summer — a request that Republicans hope to use to force Obama to accept long-term deficit-reduction measures.