SCOTT SIMON, host:
And indeed, the showdown over the government's budget for the next six months is just the first in a series of fiscal fights likely in the months to come. President Obama said last night that the tentative agreement between the parties to avoid a governmental shutdown is a good sign.
President BARACK OBAMA: And it's my sincere hope that we can continue to come together as we face the many difficult challenges that lie ahead, from creating jobs and growing our economy to educating our children and reducing our deficit. That's what the American people expect us to do. That's why they sent us here.
SIMON: NPR's Scott Horsley joins us now. Scott, thanks for being with us.
SCOTT HORSLEY: Good to be with you, Scott.
SIMON: So what does this say about cooperation, and some of the challenges ahead?
HORSLEY: Well, as you said at the outset, the government is still operating this morning, so if that's where you set the bar, this was an exercise in cooperation. And for federal workers and the people who depend on them, that is probably what matters. But it was an ugly compromise, not really inspiring to watch.
A lot of those federal workers left work yesterday not knowing if they would be getting a paycheck this coming week. And the fact that it, literally, was the 11th hour before President Obama could announce this deal suggests that we may have a lot of late nights to come in this new era of divided government.
SIMON: And Scott, where do you foresee the Republicans and the Democrats squaring off next? What issues; what budget items?
HORSLEY: Well, the most immediate deadline that's confronting this government is the debt ceiling. Unless Congress votes to raise the debt ceiling, the government will run out of authority to borrow money sometime in the middle of next month. Now, the responsible grown-ups in Washington - both Democrats and Republicans - have all agreed a government default, it would be catastrophic. It'd be much worse than any short government shutdown.
But some Republicans have promised to withhold their vote to raise the debt ceiling without some big concessions. So that's one fight ahead. Then you've got the battle over the budget for the next fiscal year, which starts in October. This past week, the Republicans chairman of the House Budget Committee unveiled his plan. It includes big tax cuts, privatizing Medicare. No one expects it to pass, but it does set out the GOP starting point way to the right.
And finally, you've got the long-term challenge of dealing with the nation's debt and deficits.
SIMON: Of course, President Obama said for days that a budget agreement was possible if both sides were willing to give a little. And last night, he said in the end, that's what happened. Let's hear this.
Pres. OBAMA: Like any worthwhile compromise, both sides had to make tough decisions and give ground on issues that were important to them - and I certainly did that.
SIMON: And where did he give that ground, Scott?
HORSLEY: Well, you know, he accepted much bigger tax cuts than the Democrats wanted. As the White House said repeatedly, they met the Republican demand for tax cut - excuse me, spending cuts - spending cuts more than halfway. If you think back to December, when the tax cut deal was negotiated, Mr. Obama said that preserving the Bush tax cuts for the wealthy was the holy grail for Republicans.
And so in exchange for that, he was able to extract a lot in return - an extension of jobless benefits, a big payroll tax cut. In this case, avoiding a government shutdown was the president's holy grail. The White House was very concerned about the economic fallout from a government shutdown. And as a result, he was willing to give a lot of ground on spending cuts.
Now, that said, the White House would argue it's not just that top-line number - $38.5 billion - but what those cuts are made up of. And as we've heard, the White House is arguing the president was able to preserve some of his priorities, including money for Head Start and higher education. And of course, he did draw the line on some of those policy riders that would have hamstrung the EPA or defunded Planned Parenthood.
SIMON: Scott, as someone who has covered President Obama as president and a candidate, midway into his term now - just announced for re-election - are there any lessons that you see about his leadership style in these negotiations?
HORSLEY: Well, he's willing to stay in the background when he thinks it's helpful. But he's also willing to put on the pressure, when he needs to. There was an important phone call he placed to Speaker John Boehner yesterday morning, when things looked bleakest. It seemed to get the negotiations moving again. But he's adjusting to a new era.
And as Speaker Boehner has said, all sides are sort of getting acquainted to this new era of divided government.
SIMON: NPR's Scott Horsley, thanks so much.
HORSLEY: My pleasure, Scott. Transcript provided by NPR, Copyright National Public Radio.