Democrats abruptly abandoned a fight over spending on Thursday and said they would instead extend government funding on a temporary basis, a move that gives Republicans a greater chance to enact the deep cuts they have promised.
The surprise agreement looked likely to end a high-stakes game of chicken that could have led to a shutdown of wide swaths of the U.S. government when current funding expires on Saturday night.
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Like the $858 billion tax deal poised to clear Congress over the objection of liberal Democrats, the agreement on funding reflects the new clout Republicans enjoy in Washington after a sweeping victory in November congressional elections.
Democrats had hoped to pass a $1.1 trillion spending bill that would fund everything from national defense to preschool programs before January, when Republicans take control of the House of Representatives and hold more seats in the Senate.
Republicans in the Senate had blasted the 1,924-page bill as a wasteful boondoggle that ignores voters' concerns over government spending, and called for a temporary extension of the current bill.
Senate Democratic Leader Harry Reid said nine Republicans had agreed to back the bill, which likely would have given him enough votes to pass it. But Republican support evaporated in recent days, he said.
"In reality we only have one choice, and that's a short term" funding bill, Reid said on the Senate floor.
Reid said he would work with the Republican leader, Senator Mitch McConnell, to figure out how long the temporary extension should last.
McConnell introduced a measure earlier in the day that would extend current funding until February 18, 2011.
The fiscal year began on October 1, but the government has been operating on an extension of last year's budget because Congress has been unable to pass any of the 12 bills that fund everything from prisons to scientific research.