Congressional leaders and President Obama reached a budget agreement a little more than an hour before a midnight deadline for avoiding a partial shutdown of the federal government. The agreement, which would slash about $38 billion in spending this year, was announced separately by the president, House Speaker John Boehner (R-OH) and Senate Majority Leader Harry Reid (D-NV).
"We have agreed to an historic amount of cuts for the remainder of this fiscal year, as well as a short-term bridge that will give us time to avoid a shutdown while we get that agreement through both houses and to the president," Reid said in a joint statement with Boehner.
Obama hailed the deal as "the biggest annual spending cut in history," and Boehner said that over the next decade it would cut government spending by $500 billion.
"Tomorrow, I'm pleased to announce that the Washington Monument, as well as the entire federal government, will be open for business," Obama said in a televised statement at the White House. "And that's because today Americans of different beliefs came together again."
The Senate, followed just after midnight by the House, approved a short-term funding measure to keep the government going through Thursday, giving Congress enough time to pass the budget agreement to keep it funded through September.
White House Budget Director Jacob Lew issued a directive saying that in view of the agreement, "agencies are instructed to continue their normal operations."
The Democrats and the White House rebuffed numerous Republican attempts to curtail the reach of the Environmental Protection Agency and sidetracked their demand to deny federal funds to Planned Parenthood, which provides family planning and other medical services.
The administration had readied hundreds of thousands of furlough notices for federal workers and warned that federal services from national parks to tax-season help centers would be shuttered without a deal by midnight.
Earlier in the day, Reid said that after meetings Thursday night, both sides arrived at a number to cut from the spending measure, leaving only the so-called riders — including one to stop federal funds to Planned Parenthood.
"Then at 4 o'clock in the morning, I got an email that said they were trying to back out of the number they agreed on before," he said.
The Republicans, he said, had a choice.
"They can keep their word and significantly cut the federal deficit or they can hold their ground and shut down the government over women's health," he said. "If that sounds ridiculous, it's because it is ridiculous."
He reiterated that Planned Parenthood's federal funds go toward other services, not abortion. U.S. taxpayer dollars may not be used for abortions except in certain emergency situations.
Democratic Sen. Patty Murray of Washington accused the GOP of holding women's health hostage to the budget process.
"Not on our watch," she said.
With the economy just beginning to create jobs in large numbers, Obama has said a shutdown would damage the recovery by putting government employees out of work. "For us to go backward because Washington couldn't get its act together is just unacceptable," he said.
Since taking control of the House in January, Republicans have vowed to slash spending and curb the deficit. Democrats say they are willing to make some cuts, but they say the Republicans would cut vital government services and are pushing a social agenda. Republicans have accused the Democrats of using gimmicks instead of making real spending cuts.
This story contains material from The Associated Press.