By DAVID ESPO
WASHINGTON (AP) -- The federal government lurched toward a shutdown for the first time in 15 years Friday as Republicans and Democrats in Congress struggled for a way out and swapped increasingly incendiary charges over which side was to blame.
The Obama administration readied hundreds of thousands of furlough notices for federal workers, to be released any time after the midnight deadline for a deal to keep operations running.
"We know the whole world is watching us today," said Democratic Senate Majority Leader Harry Reid.
He, President Barack Obama and House Speaker John Boehner all agreed a shutdown posed risks to an economy still recovering from the worst recession in decades. But there were disagreements aplenty among the principal players in an early test of divided government -- Obama in the White House, fellow Democrats in control in the Senate and a new, tea party-flavored Republican majority in the House.
The political stakes of a shutdown -- which would affect an estimated 800,000 workers -- are huge ahead of next year's presidential and congressional elections.Republicans got most of the blame in the last government shutdown during Bill Clinton's presidency, but there's no assurance that will happen this time around.
For much of the day, Reid and Boehner disagreed about what the disagreement was about.
Reid said there had been an agreement at a White House meeting Thursday night to cut spending by about $38 billion as part of a bill to finance the government through the Sept. 30 end of the budget year.
He said Republicans also were demanding unspecified cuts in health services for lower income women that were unacceptable to Democrats.
"Republicans want to shut down our nation's government because they want to make it harder to get cancer screenings," he said. "They want to throw women under the bus."
Boehner said repeatedly that wasn't the case -- it was spending cuts that divided the two sides.
"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.
The military, mail carriers, air traffic controllers and border security guards would still be expected at work, although paychecks could be delayed.
National parks and forests would close, and taxpayers filing paper returns would not receive refunds during a shutdown. Passports would be available in cases of emergencies only.
Senate Republican Leader Mitch McConnell sounded hopeful, predicting an agreement and saying, "I assure you, these are not unresolvable issues."
The House passed legislation Thursday to keep the government running for another week while also cutting $12 billion in spending -- and providing enough money for the Pentagon to operate through Sept. 30.
Boehner urged Obama to reconsider a veto threat. That seemed unlikely, although Republicans and Democrats alike talked of trying once more to pass a stopgap bill if the larger agreement remained elusive.
Obama has already signed two of those interim bills, which included a total of $10 billion in spending cuts.
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.
Democrats said Republicans had effectively jettisoned numerous demands to block Environmental Protection Agency regulations aimed at polluters, a key stumbling block in negotiations for weeks.
Originally, Republicans wanted to ban federal funds for Planned Parenthood, a health care services provider that is also the nation's largest provider of abortions.
Federal funds may not be used to pay for abortions except in strictly regulated cases, but supporters of the ban said cutting off government funds for the organization -- currently about $330 million a year -- would make it harder for it to use its own money for the same purpose.
Democrats rejected the proposal in private talks. Officials in both parties said Republicans returned earlier in the week with a proposal to distribute federal funds for family planning and related health services to the states, rather than directly to Planned Parenthood and other organizations.
Democrats said they rejected that proposal, as well, and then refused to agree to allow a separate Senate vote on the issue as part of debate over any compromise bill.
Associated Press writers Andrew Taylor, Alan Fram, Julie Pace and Ben Feller contributed to this story.
Copyright 2011 The Associated Press.