The House and Senate leadership (and the President) have agreed in principle to a stopgap spending bill that will keep the government running after the start of FY 2013 on October 1st, despite having not passed any of the 12 annual spending bills that fund government activities. The so-called “continuing resolution” will keep government running through March 2013 at FY 2012 levels, giving the new Congress (and perhaps new president) the opportunity to leave its mark on FY13 spending.

Speaker of the House John Boehner (R-OH) and Majority Leader of the Senate Harry Reid (D-NV) came to the agreement after Boehner agreed to slightly higher-spending levels in exchange for the longer-term CR. Republicans — believing they’ll do well in November and perhaps take the Senate and the presidency — preferred to have the new Congress decide the final appropriations outcome, rather than let a lame-duck Congress take it up in November and December. The agreement calls for a CR that’s “clean” with no additional riders (ie, no attacks on the President’s health care program).

Congress will take up the CR shortly after returning from the August recess and likely quickly pass it, perhaps leaving some time before heading home to campaign to figure out how to deal with the looming automatic across-the-board cuts due to the sequestration provisions in the Budget Control Act that will take effect Jan 2, 2013. Perhaps pushing off the final appropriations resolution for FY 13 until March signals that the leadership expects to come to some agreement on delaying or postponing sequestration in the coming weeks…we’ll see. Otherwise, there has been no progress in settling the sequestration question. In fact, at the moment the Administration is trying to convince the nation’s defense contractors that sequestration needn’t result in massive layoffs and therefore companies shouldn’t feel compelled to send out pink slip notices to all employees on November 2nd, as they’re threatening.

More details as they become available!