By Andy Sullivan
WASHINGTON (Reuters) - Healthcare, global warming, birth control and other hot-button political issues are threatening to derail a compromise over spending cuts, lawmakers and aides said on Friday.
The dispute again raises the possibility of a government shutdown that would force thousands of layoffs and rattle financial markets, even as Republican and Democratic negotiators began to bridge a $50 billion gap between their rival spending plans.
Aides said the closed-door talks were initially productive. But on Friday afternoon, leaders from both parties issued a volley of sharply worded statements that any shutdown would be the fault of the other.
"The status quo is unacceptable, and right now that is all Washington Democrats are offering," said House Speaker John Boehner.
"The House Republican leadership is back to agonizing over whether to give in to right-wing demands that they abandon any compromise on their extreme cuts," Democratic Senator Charles Schumer said.
The U.S. government has been operating on a temporary extension of last year's budget since October 1 because lawmakers have been unable to resolve a partisan debate over spending.
Time is running short for a compromise and lawmakers will have only a few days to resolve the impasse when they return to Washington next week.
Pressured by Tea Party fiscal conservatives, Republicans are eager to keep a campaign promise to scale back government, while Democrats worry that sharp cuts would imperil the shaky economic recovery.
But Republicans also hope to use their power of the purse to prevent Democratic President Barack Obama from pursuing policies they do not like. Those range from the landmark healthcare overhaul passed last year to restrictions on greenhouse gas emissions and denying funding to Planned Parenthood, a birth-control group that also provides abortions.
A spending bill passed by the Republican-controlled House includes roughly 30 such restrictions, which are unlikely to pass a Democratic-led Senate or make it past Obama's veto pen.
A bill free of policy restrictions would be a tough sell for Boehner, who owes his job to the dozens of conservative lawmakers aligned with the Tea Party movement.
"There is no way a bill without policy restrictions can pass the House," a Republican leadership aide said.
Adding further pressure from the right, Tea Party activists plan a rally at the Capitol building next Thursday.
'CRUISING Toward A SHOWDOWN'
A stopgap measure keeps the government running through April 8. But any deal will have to be in place well before then to allow enough time for it to be drawn up into legislative language and passed through both the House of Representatives and the Senate.
If they have not reached a deal by the middle of next week, lawmakers will have to decide whether to pass another stopgap measure or dig in their heels and prepare for a shutdown, aides said.
Passing another stopgap measure could be difficult after lawmakers already approved two extensions this year. Senior legislators from both parties have said they will not vote for another extension, and 54 conservative House Republicans refused to back the most recent one.
The two sides could find a way out by including some of the less dramatic restrictions on environmental protection, said Sarah Binder, a senior fellow at the Brookings Institution think tank. That could win the support of moderate Democrats while allowing conservative Republicans to claim a partial victory.
Boehner could then promise conservative Republicans they will get a chance to push for further restrictions in other budget battles that crop up over the coming weeks, she said.
"It's a question of far he's willing to go to pick up Democratic votes," Binder said.
(Editing by Peter Cooney)
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