By Richard Cowan
WASHINGTON (Reuters) - The second-ranking Democrat in the U.S. House of Representatives predicted on Tuesday a tough battle for averting a government shutdown on October 1, saying the atmosphere in Congress is worse than it was in 1995-96 when a similar funding impasse closed federal agencies.
"I think we're going to have a fight," Representative Steny Hoyer told reporters, adding that 18 years ago there were significantly more moderate Republicans willing to seek compromises with Democrats and still there were shutdowns.
Now, Hoyer said, Republicans "terrified of the Tea Party," are hurting prospects for a deal on government spending.
House Republicans backed by the smaller-government Tea Party movement want to use the spending bill and upcoming legislation to raise U.S. borrowing authority as battlegrounds for both paring back the size of government and stopping or delaying a new national healthcare law.
Unless the Republican-controlled House, Democratic-controlled Senate and President Barack Obama reach an agreement on funding levels for Congress in the fiscal year starting October 1, most government activities will grind to a halt for lack of money.
For now, leaders have been working on a temporary funding bill to avert government shutdowns and give them more time to figure out a deal for the full fiscal year, which ends September 30, 2014.
The budget fight has become more complicated as House Republicans insist on coupling a temporary spending bill with efforts to either repeal or delay "Obamacare," which aims to expand health coverage to uninsured Americans.
House Republican leadership aides say they are still trying to figure out how to get a spending bill passed in coming days given the disagreements within their own party on tactics.
Hoyer laid down a tough marker, however, saying that he would vote against a stopgap spending bill - even one without attacks on Obamacare - if that measure aimed to spend only $988 billion for the full fiscal year.
"$1.058 billion I think is the right number," Hoyer said, explaining that it would fund government at the levels called for in a 2011 budget law, but without the additional across-the-board spending cuts that began earlier this year.
Many Republicans want to maintain the tougher deficit-reduction discipline that the automatic spending cuts provide and they argue that Obamacare, over the long-run, will hurt the economy and add to budget deficits.
Hoyer said that a "big, comprehensive" deal is needed to replace those across-the-board cuts that even Republicans like House Appropriations Committee Chairman Harold Rogers have criticized as "unrealistic and ill-conceived."
A large deal sought by Democrats would have a mix of spending cuts, tax increases and reforms to programs like Social Security and Medicare. But it has been elusive and there has been no sign of one coming together anytime soon.
The non-partisan Congressional Budget Office on Tuesday estimated that if the growth in long-term government healthcare and retirement costs are not curbed, U.S. budget deficits will nearly double as a percentage of economic output between 2023 and 2038.
Instead of passing a short-term bill to fund the government, one that possibly extends for only several weeks, Hoyer urged settling full-year funding by September 30.
(Reporting By Richard Cowan and Rachelle Younglai; Editing by Tim Dobbyn)