2 Apr 2011

Federal budget cut being negiotated

10:55 am on 2 April 2011

Congressional leaders in the United States are labouring on a deal that could cut a record $US33 billion from the government budget by October.

But Republican House Speaker John Boehner warned on Thursday that a final agreement had not been reached.

Members of the Tea Party movement have held a rally in Washington DC to demand greater cuts.

Without a budget agreement of some kind, much of the federal government will shut on Friday, 8 April.

Mr Boehner and Vice-President Joe Biden and Senate Majority Leader Harry Reid have reportedly agreed tentatively to the figure of $US33 billion, although Mr Boehner said on Thursday the amount was not final.

The BBC reports a cut of $US33 billion would be the single largest in US history.

Democrats have warned large cuts could endanger the economic recovery.

The current budget deficit is $US1.4 trillion. Republicans are opposed to any tax increases.

Government shutdowns are not uncommon. The BBC reports the federal government shut down 10 times during the Carter and Reagan administrations. The last time was in 1995 during the Clinton years.