UPDATE 9-U.S. House Republicans cite progress in averting government shutdown

(Adds Freedom Caucus support, background)

WASHINGTON, Jan 18 (Reuters) - U.S. House Republicans said late on Thursday they had made progress toward passing a short-term extension of government funding to avert a politically embarrassing shutdown, after a day of tough negotiations and confusion when President Donald Trump offered mixed signals on the stopgap plan.

Trump complicated the talks by saying a six-year extension of funding for the Children's Health Insurance Program (CHIP), a Democratic priority, should not be included. The White House later said the president fully backed the proposal pending in the House of Representatives, which includes the insurance plan.

At the same time, some conservatives in the House were withholding support, as they pushed for guarantees that steps would be taken to beef up the U.S. military.

Following an early evening meeting of conservative leaders, House Speaker Paul Ryan and his top lieutenants, House Majority Leader Kevin McCarthy proclaimed to reporters: "We're in very good shape" for passage on Thursday night.

Republican Representative Mark Meadows, who heads the conservative House Freedom Caucus, threw his weight behind the stopgap spending bill, saying new provisions on military readiness would be floated by Ryan for consideration. Most of his roughly three-dozen caucus members also fell in line.

Meadows refused to provide details on what might be unveiled separate from the spending bill, other than to say it related to military readiness.

But it was still not clear whether the Senate would also be able to pass a spending bill to fund the government through Feb. 16, given Democratic opposition and "no" votes expected from a few Republican senators as well. The federal government is already operating on its third temporary funding extension since the 2018 fiscal year began on Oct. 1.

If money were to run out, many federal agencies would be shut down and workers sent home. But "essential services" dealing with public safety and national security would continue.


Hovering over the government funding fight are November's congressional elections in which one-third of the 100-member Senate and all 435 House seats are up for grabs as Republicans battle to keep control of both chambers.

If the funding fight is not resolved and the government goes into shutdown mode over the weekend, there is expected to be fierce jockeying among Republicans and Democrats over assigning blame.

Negotiators have scrambled to reach a budget deal that would include Democratic efforts to protect young immigrants known as "Dreamers," who were brought to the country illegally as children, and satisfy conservatives who want to raise spending for the military.

In the Senate, Republicans hold a mere 51-49 majority and most legislation, including spending bills or an immigration deal, requires 60 votes to pass the chamber.

Republican Senator Lindsey Graham, who is involved in the immigration negotiations, and conservative colleague Mike Rounds have said they will not vote for a short-term funding bill.

Republican Senator Rand Paul, interviewed by Fox News, said: "I'll be a no vote because I'm not going to vote to continue to put the country further into debt."

Fellow Republican Senator John McCain, who is battling brain cancer, is not expected to return for the vote. Several Democrats, including Tim Kaine, Mark Warner and Patrick Leahy, have said they will vote against the resolution.

Questions about Trump's support arose earlier on Thursday, when he said on Twitter that "CHIP should be part of a long term solution, not a 30 Day, or short term, extension!" That led the White House to issue a statement saying Trump was still on board with the House proposal.

Asked if Trump's statements were making it more likely Republicans would be blamed for a shutdown, Republican Senator Jeff Flake, a frequent Trump critic, said simply: "Yes."

With the threat of a shutdown looming, some senators began to discuss the possibility of a series of short one- or two-day extensions to allow negotiations to continue without stopping government operations.

"I think some of our members would like to see us negotiate the bigger deal and do a short-term CR for a few days," Republican Senator John Thune said.


Some government agencies began to prepare for a possible shutdown. The U.S. Government Accountability Office sent its employees a memo on Thursday warning that regular operations would cease on Monday if a shutdown occurred.

It would be the fourth significant government shutdown. The most recent was a 17-day shutdown in 2013 after Republicans refused to support a spending bill that included funds for Obamacare. There were also two shutdowns in late 1995 and early 1996 when Democratic President Bill Clinton clashed with Republican House Speaker Newt Gingrich over funding priorities.

Democrats have insisted a long-term spending bill must include a measure covering the "Dreamers," who were protected from deportation under former President Barack Obama's Deferred Action for Childhood Arrivals (DACA) program.

Trump ordered DACA to end in March and asked Congress to come up with a legislative fix. But bipartisan congressional negotiations with the White House faltered last week, prompting Republican leaders to begin pushing for the passage of the stopgap measure.

Early on Thursday, Senate Democratic leader Chuck Schumer said the House bill to fund the government was very likely to be unacceptable to the Senate."

(Additional reporting by Susan Cornwell, Susan Heavey, Amanda Becker and Blake Brittain; Writing by John Whitesides; Editing by Jeffrey Benkoe and Peter Cooney)