Government Shutdown Gets Closer: Obama, John Boehner, Harry Reid Don't Reach Deal

VIDEO: Jake Tapper reports on the disputes that may lead to government
WATCH Government Shutdown: Clock Ticking Down

Yet again, President Obama and the leaders of the House and Senate gathered at the White House but failed to reach agreement on how to keep the federal government running beyond an end-of-Friday deadline.

"We have narrowed the issues," House Speaker John Boehner, R-Ohio, and Senate Majority Leader Harry Reid, D-Nev., said in a written joint statement after the meeting. "However, we have not yet reached an agreement. We will continue to work through the night to attempt to resolve our remaining differences."

It was the congressional leaders' second meeting with Obama today and fourth this week, and the leaders' statements sounded strikingly similar to comments following earlier White House meetings.

"I've been out speaking to the press before," Reid said after the meeting, "and I've said before that we've narrowed the issues -- and we have -- but the sad part about it is we keep never quite getting to the finish line."

While also claiming "additional progress," President Obama noted time was growing short to avert a government shutdown.

"I'm not yet prepared to express wild optimism, but I think we are further along today than we were yesterday," Obama said.

"What I've said to the speaker [Boehner] and what I've said to Harry Reid is because of the machinery of the shutdown is necessarily starting to move, I expect an answer in the morning," Obama added.

"My hope," he said, "is that I will be able to announce to the American people sometime relatively early in the day that a shutdown has been averted, that a deal has been completed that has very meaningful cuts in a wide variety of categories, that helps us move in the direction of living within our means but preserves our investments in things like education, innovation, research, that are going to be important for our long-term competitiveness."

Yet again, he declined to specify specific points of disagreement in the negotiations -- believed to center not only around a dollar amount to be cut, but also which parts of the federal budget to cut and whether subjects such as abortion funding and environmental regulation will be part of an agreement.

A shutdown would have wide effects, including perhaps 800,000 federal worker furloughs, curtailment of public services such as mortgage, passport and loan processing, delayed tax refunds, interruption of military paychecks and disruption to a recovering economy.

At an earlier White House meeting today, Boehner and Reid also expressed optimism that they could find middle ground.

"There is no agreement on the number. There are no agreement on the policy issues," Boehner said. "All of us sincerely believe that we can get to an agreement but we are not there yet."

Reid said to look forward to a government shutdown if nothing is done today and the negotiators all have a "bad day tomorrow."

Republicans Pass Troop-Funding Temporary Budget Despite Obama Veto Threat

Meanwhile, there are signs the negotiating atmosphere may be getting stickier as the negotiations come down to the wire.

Defiant House Republicans today passed a temporary budget measure that would ensure U.S. troops are paid through September and keep the government running for another week, hours after President Obama threatened to veto it.

The bill, however, won't resolve the bitter standoff between Democrats and Republicans and, in fact, it could make things worse.

Boehner expressed disappointment at the president's rejection of the temporary extension, saying that "neither the president nor Senate Democrats have identified a single policy provision they find objectionable in the bill."

Obama said earlier this week he would not vote for the measure, which includes $12 billion in spending cuts, unless there were hints of a progress in negotiations on a final bill.

"This bill is a distraction from the real work that would bring us closer to a reasonable compromise for funding the remainder of fiscal year 2011 and avert a disruptive federal government shutdown that would put the nation's economic recovery in jeopardy," the White House said in a statement.

Democrats charged that the bill is merely a political cover.

"This is a very cynical ploy to use our troops to try to impose the Republican agenda through the budget process," said Rep. Chris Van Hollen, D-Md.

Democrats accuse Republicans of holding up a deal because they are insisting on keeping so-called "riders" -- amendments that passed in the House -- related to government funding for abortion and limiting the Environmental Protection Agency's ability to enforce restrictions on greenhouse gas emissions.

Sources said earlier today that spending cuts in the remainder of the fiscal 2011 budget stood at $34.5 billion after Republicans agreed, late Wednesday, to $3 billion in cuts to the Pentagon's budget.

For many Tea Party-backed lawmakers, that may not be enough. They've said they want to see at least $61 billion in cuts, a number from the original House bill. About $10 billion in spending already has been cut in temporary funding measures.

Avoiding a Government Shutdown: Time Running Out?

If a deal to fund the government cannot be reached, at least 800,000 federal employees are expected to be furloughed, the same as during the 1995 government shutdown. But unlike then, it's unclear whether they would receive back pay for the lost time.

Troops and other agency staff that are considered "essential" and kept on duty during a shutdown will not receive paychecks until Congress makes a deal.

Members of Congress, however, will continue to be paid. Every lawmaker must decide which of their employees is considered essential and should be kept on staff while the government is shut.

Current funding expires at midnight on Friday night and a House bill needs to be presented 48 hours before it is brought to the floor for a vote.

Democrats blame Boehner for caving in to "rambunctious" freshman Republicans and Tea Party pressure.

In an interview with ABC News' George Stephanopoulos Wednesday, Boehner said he is in full agreement with conservative Republicans affiliated with the Tea Party.

"What they want is they want us to cut spending," Boehner said. "They want us to deal with this crushing debt that's going to crush the future for our kids and grandkids. There's no daylight there" -- between Boehner's position and the Tea Party's position.

The Office of Management and Budget has ramped up its planning ahead of the looming deadline. It advised agency chiefs of staff and deputy secretaries and recommended that they begin to notify their employees about their shutdown plans. Agencies also will begin to brief various stakeholders -- including contractors, federal employee unions, state and local governments, grantees -- about their shutdown plans.

The last government shutdown happened in 1996 under President Bill Clinton.

Under federal laws, essential staff still have to report to work, but all nonessential staff will be furloughed without pay. Furloughed staff are not allowed to work as unpaid volunteers to the government, enter their offices, use their work BlackBerries or computers, and access their work email.

Each agency is responsible for identifying its essential staff. Federal employees who are "necessary to protect life and property" and are needed to perform an "orderly shutdown of emergency operations" are considered "essential." That includes most national intelligence staff, military personnel, air traffic controllers, law enforcement, emergency and disaster personnel, the Transportation Security Administration, Coast Guard and similar staff.

During the last full five-day shutdown in 1995, an estimated 800,000 federal employees were furloughed, according to the Congressional Research Service. A smaller figure, 284,000, were furloughed in the partial 21-day shutdown that followed soon after.

Amid contractors, who are unlikely to receive back pay, more than 20 percent were negatively impacted by the last funding lapse.

A much larger number likely will be affected this time because of the size and scope of the federal government.

Washington, D.C. Mayor Vince Gray said Tuesday that because D.C.'s federal subsidy would be affected, trash collection and pothole repair in the city could be threatened during a shutdown.

The ripple effects of a shutdown will be felt outside of the nation's capital as well. The U.S. Postal Service will operate as normal, since it is self-funded. Social Security, veterans and Medicare checks would continue to be disbursed, although there could be a delay in services for new registrants and those who have filed a change of address form.

Many Americans may have to hold off on their travel plans. Museums and national parks will close, as will the national zoo, and passport applications will be delayed.

Some government inspection services, such as for meat, may be delayed as will some clinical trials administered by the National Institute of Health.

The uncertainty also could roil stock markets, rattle consumer confidence and hurt tourism, with the severity depending on how long a shutdown lasts.

The average federal government worker makes $1,404 weekly, according to the latest U.S. Bureau of Labor Statistics figures. If 800,000 of them are furloughed and don't get a paycheck during a government shutdown, it zaps about $1.1 billion out of the economy in direct employee compensation each week.

ABC News' Sunlen Miller, Jonathan Karl, Jake Tapper, Matt Jaffe and Dan Arnall contributed to this report.