Obama signs bill to head off government shutdown

Updated 4:28 p.m. ET

President Obama has signed a short-term continuing resolution to keep the government running beyond Friday.

The bill, which the president signed in the Oval Office Wednesday afternoon, provides funding for government operations and means a temporary reprieve from a government shutdown.

The Democrat-led Senate passed the measure earlier in the day in a 91-9 vote. The Republican-led House passed it yesterday.

The bill, which cuts federal spending by about $4 billion, provides just two weeks of government funding. Lawmakers must now scramble to work out a new agreement before March 18th, when the short-term resolution runs out, to avoid a shutdown.

Democrats and Republicans were able to work out a deal on the two-week extension bill because the spending cuts came from areas where both parties agree. The $4.1 billion in cuts in the extension bill includes $1.24 billion in cuts to eight programs that Mr. Obama targeted for termination in his 2012 budget.

Those programs include $650 million in highway funding and $468 million in education funding among other measures. The remaining $2.7 billion is from cutting 2010 earmark funding.

But crafting a longer-term spending bill - one that goes through the rest of the fiscal year, which expires September 30 - will be a challenge.

Democrats complained bitterly about many of the more than $60 billion in cuts in a spending bill passed earlier this year by the House even as some Republicans complained that the cuts were not deep enough. The bill included cuts in education, the environment and homeland security as well as provisions on issues like clean water regulations and family planning, and Mr. Obama vowed to veto it if it reached his desk.

The parties will need to bridge their divide in a very short time frame after House Republican Leader John Boehner rebuffedan appeal from Mr. Obama to pass a short-term continuing resolution that lasts for one month (instead of two weeks) in order to give lawmakers more time to negotiate.

There are three possible outcomes before March 18th. The first is that lawmakers take no action and the government shuts down - leaving many government workers temporarily out of work, national parks closed, and passport applications unprocessed. (Government operations deemed essential will continue.)

The second is that lawmakers pass another short-term continuing resolution while they keep working on a longer term deal. Democrats have warned that funding the government through a series of short-term continuing resolutions creates economic uncertainty for businesses, while Republicans complain that they reflect the fact that Democrats are "failing to listen to the American people who want to keep the government running while cutting spending," as Boehner put it after Tuesday's House vote. But lawmakers may have no other choice if they can't work out a deal quickly and want to avert a shutdown.

The third option is passage of a longer-term continuing resolution to fund the government through the fiscal year, something that Senate Democratic Leader Harry Reid suggested would not happen without significant intervention by the White House. President Obama "has the bully pulpit in the White House which is very important," Reid said Tuesday.

In a statement Wednesday, the president called for immediate budget negotiations between Congress and the White House, with Vice President Biden, Chief of Staff William Daley and Budget Director Jack Lew playing a role.

"I'm pleased that Democrats and Republicans in Congress came together and passed a plan that will cut spending and keep the government running for the next two weeks," he said. "But we cannot keep doing business this way. Living with the threat of a shutdown every few weeks is not responsible, and it puts our economic progress in jeopardy."

Mt. Obama said a long term agreement "should cut spending and reduce deficits without damaging economic growth or gutting investments in education, research and development that will create jobs and secure our future."

"This agreement should be bipartisan, it should be free of any party's social or political agenda, and it should be reached without delay," he added.