Deal to avoid government shutdown

"Most of the policy issues have been dealt with, and the big fight is about spending," he said. "When will the White House and when will Senate Democrats get serious about cutting federal spending?"

By midday Friday, 12 hours before the funding would run out, most federal employees had been told whether they had been deemed essential or would be temporarily laid off in the event of a shutdown.

Obama canceled his scheduled travel plans and kept in touch with both Boehner and Reid.

The standoff began several weeks ago, when the new Republican majority in the House passed legislation to cut $61 billion from federal spending and place numerous curbs on the government.

In the weeks since, the two sides have alternately negotiated and taken time out to pass interim measures.

For Congress and Obama there are even tougher struggles still ahead — over a Republican budget that would remake entire federal programs and a vote to raise the nation's debt limit.

Republicans intend to pass a 2012 budget through the House next week that calls for sweeping changes in health care entitlement programs and would cut domestic programs deeply in an attempt to gain control over soaring deficits.

And the Treasury has told Congress it must vote to raise the debt limit by summer — a request that Republicans hope to use to force Obama to accept long-term deficit-reduction measures.

Associated Press writers Donna Cassata, Andrew Taylor, Alan Fram, Julie Pace and Ben Feller contributed to this story.