Congress reaches deal to avert government shutdown

WASHINGTON - JULY 25: U.S. Senate Majority Leader Sen. Harry Reid (D-NV) (R) speaks as Sen. Charles Schumer (D-NY) (L) listens during a news conference discussing the latest development of the debt ceiling negotiations July 25, 2011 on Capitol Hill in Washington, DC. After a weekend of stalled negotiations House and Senate leaders formally unveiled competing backup plans to raise the federal debt limit in order to meet the Aug. 2 deadline.
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Updated at 3 p.m. ET

(CBS News) Senate Majority Leader Harry Reid and House Speaker John Boehner on Tuesday afternoon announced they have reached a deal to keep funding federal operations past September 30 and avert a government shutdown.

"This agreement reached between the Senate, the House and the White House provides stability for the coming months, when we will have to resolve critical issues that directly affect middle class families," Reid said in a statement.

In the absence of a new budget agreement for the next fiscal year, the deal will extend spending for another six months after the 2012 fiscal year closes at the end of September. Leaders have agreed to cap spending levels at $1.047 trillion, as agreed to in the debt deal Congress reached last August.

Members of congress will work with their staff to write the legislation over their August recess, Boehner said in a statement, so that the House and Senate can pass it in September.

Reid said in his statement that he hopes Congress "can face the challenges ahead in the same spirit of compromise."

The deal, however, is likely to anger conservative Republicans who wanted to reduce spending further. The GOP-led House in March passed a budget calling for $1.028 trillion in discretionary spending in 2013.

While the deal averts the threat of a shutdown this year, it only temporarily resolves one of the legislative body's fiscal challenges. Lawmakers still have multiple issues they must address before the end of the calendar year, including whether to extend all or part of the Bush-era tax cuts that are set to expire this year.

Congress is also searching for a way to avoid "sequestration," the $1.2 trillion in spending cuts -- half coming from the Defense Department and half from domestic programs -- slated to go into effect in January. The cuts were enacted as part of the August debt deal, since the so-called congressional "supercommittee" that was formed to find budget savings failed to reach a deal.