Congressional Forecast Worsening: Gridlock With Increased Chance of Shutdown

VIDEO: Jake Tapper Looks at the Budget Debate

There is a three-pronged budget war between President Obama and Republicans in Washington and it has politicians uttering a word they haven't used since 1994: shutdown.

On one front: the fight over what programs to cut next year. On another: whether to extend the ever-rising debt ceiling again. And then there is the confrontation that could have the most immediate impact: whether the federal government will be shut down next month.

Government funding is due to run out on March 4 when the latest continuing resolution expires. If Congress fails to act, then the government would shut down.

In recent days Democrats have repeatedly called for Republicans to take the prospect of a shutdown off the table, a call that Jack Lew, the Office of Management and Budget director reiterated today.

"We all want to avoid a situation like that. It's not the right way to run the government and I think we have a broad agreement that we need to keep essential services going," Lew said.

But the chairman of the House Budget Committee, Rep. Paul Ryan, R-Wis. had a different view. "It is not our desire to see the government shutdown, but equally we don't want to rubber-stamp these elevated spending levels."

Even if the shutdown is avoided, at some point later this spring the national debt is set to hit its current $14.3 trillion limit. If Congress fails to act on the administration's request to raise the debt limit, then the government would have trouble refinancing its debt, taking in money to continue operations, and even default would be a possibility.

Then there is the longer term skirmish over funding for the next fiscal year. That fight kicked off this week with the unveiling of President Obama's 2012 budget proposal.

The battle lines have already been drawn: Republicans want big cuts, Democrats less so. The GOP has been bolstered by its victories in last November's elections. Now Republicans feel the need to demand ever more sweeping cuts to appease their political base.

"We're broke," House Speaker John Boehner said last week. "Let's be honest with ourselves."

"We have two opportunities just ahead of us to do something important on spending and debt," the Senate's top Republican Mitch McConnell said. "We have the continuing resolution for the balance of the year. We have the president asking us to increase the debt ceiling. Both of those are opportunities to do something important on spending and debt, which we believe is directly related to the sluggish growth we've had in the private sector."

In addition to the GOP's desire to make far larger cuts than the President has proposed, Republicans are also attempting to eliminate $100 billion from this year's budget.

But while Republicans emphasize the need to slash federal spending, Democrats -- who still control the Senate -- are urging caution, warning that drastic cutbacks could prove damaging. They fear that it could harm the nation's economic recovery, and they see the chance to portray their GOP counterparts as extreme and reckless in their budget proposals.

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