The last-minute budget deal President Barack Obama and congressional leaders struck to avert a government shutdown paves the way for what Republicans promised on Saturday will be more spending fights to come.

With just over an hour to spare before a midnight deadline, Obama's Democrats and opposition Republicans agreed on Friday to a compromise that will cut about $38 billion in spending for the rest of this fiscal year, which ends on Sept 30.

Congress then approved a stopgap funding measure to keep the federal government running until the deal can be formally approved in the next several days. Obama signed it on Saturday.

This is good news for the American people, Obama said in his weekly radio address, but he said the agreement involved painful compromises.

I would not have made these cuts in better circumstances. But we also prevented this important debate from being overtaken by politics and unrelated disagreements on social issues, he said.

Friday night's agreement averted a shutdown that would have weakened the U.S. economic recovery, forced furloughs for some 800,000 federal employees, delayed paychecks for troops in Afghanistan and Iraq, and closed national parks and monuments.

But Republicans made clear the pact did not mean they were ready to compromise on bigger budget fights in the weeks ahead as the government grapples with a budget deficit expected to hit $1.4 trillion this year.

Washington has not been telling you the truth about the magnitude of the problems we are facing, said Representative Paul Ryan, who has announced a budget plan to save $6 trillion over the next decade, partly by cutting government-run health programs for the poor and elderly.

Unless we act soon, government spending on health and retirement programs will crowd out spending on everything else, including national security. It will literally take every cent of every federal tax dollar just to pay for these programs, he said on Saturday in the Republicans' weekly radio address.

Senior administration officials told reporters the deal was a good sign that the two parties could work together on other pressing issues, including increasing the debt ceiling and cutting the deficit.

(There's a) very important message tonight to the American people and hope for the future that our leaders can come together and ... produce what is the biggest annual spending cut in the history of the country, one said.

PUBLIC FRUSTRATION, AMBIVALENCE ON CUTS

Tourists strolling through Washington said they were relieved that the government had not closed.

We would not have gone in to check out the Smithsonian museum before coming over here to see the cherry blossoms if everything was closed, said Greg Kohler, 32, of Harrisburg, Pennsylvania, as he walked with his wife and baby under the capital's famed blooming cherry trees.

But Kathy Nelson, 59, a visitor from Huntsville, Alabama, walking near the White House, said a government shutdown would have been a needed wake-up call for the country to deal with its debt.

Americans have notoriously mixed feelings about deficits -- they want low taxes, but resist talk of cuts in the Medicare healthcare and Social Security pension programs.

As Democrats and Republicans traded blame and a shutdown loomed, the biggest incentive for the deal might have been the risks that failure would have posed for Obama and other politicians of both parties just as the 2012 presidential election campaign gathers steam.

The government could hit the current $14.3 trillion limit on its borrowing authority by mid-May and will need Congress to approve another increase in that debt ceiling.

Congress must also approve a budget for the next fiscal year, a fight likely to last well into the 2012 campaign season when Obama will be seeking a second term.

The spending cut was a victory for Republicans who won control of the House of Representatives in November on promises to scale back government. House Speaker John Boehner came under intense pressure from Tea Party movement conservatives inside his party to take an even tougher stance.

But Obama and the Democrats were able to beat back a Republican effort to block birth control funding to the Planned Parenthood family planning organization, because it also provides abortions -- though not with public money.

(Additional reporting by Margaret Chadbourn; Editing by Vicki Allen)

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