President Barack Obama said late Thursday that the federal government is starting to prepare for a shutdown and is seeking an early morning answer from Congressional negotiators on a possible budget deal.

Obama told reporters after a meeting with House Speaker John Boehner and Senate Majority Leader Harry Reid that because the machinery of the shutdown is necessarily starting to move, I expect an answer in the morning.

And my hope is that I'll be able to announce to the American people sometime relatively early in the day that a shutdown has been averted, he said.

The President said that at an evening meeting on Thursday we made some additional progress and that differences have been narrowed but said there were still a few difficult issues that are outstanding.

[S]o I'm not yet prepared to express wild optimism. But I think we are further along today than we were yesterday, he said.

Obama cited comments by Moody's Analytics chief economist Mark Zandi who said in a report published Thursday that the economic damage from a government shutdown would mount very quickly.

And the longer it dragged on the bigger the hit to business, consumer and investor confidence, the greater the odds of a renewed recession, he told the Associated Press, warning that a danger zone could be if the shutdown lasts two weeks or longer.

The economic damage from a government shutdown would mount very quickly, Obama said.

Obama on Thursday also vowed to veto a House measure that would keep the government open for another week while cutting $12 billion and funding the military for the rest of the year, saying parties needed to reach a full solution to the funding problem.

Shutdown Preparations

Jeff Zients, a deputy at the White House Office of Management and Budget, said Thursday his office was making the prudent moves necessary to have an orderly shutdown in case it should come to that.

He said he had spoken with agency officials and recommended that they begin to notify employees about the agencies' shutdown plans.

These conversations will include what agency services will remain open and what employees will be furloughed, he said.

Word was also going out to contractors, federal employee unions, state and local government grantees, he said.

Services that are critical to safety of life and protection of property are excepted from a shutdown, he said.

Services which will cease starting Saturday will include national parks and museums, the National Institutes of Health, processing of tax returns filed on paper, permits processing, and environmental clearances to allow building projects to proceed.

Customer service will be significantly impacted across federal government, he said.

Socieal Security and Medicare benefits will still be paid out, but it will be difficult to get answers to questions about them, he said.

Services that will remain open include the air traffic control system, emergency and disaster operations, weather alerts and earthquake and volcano monitoring.

Also functioning will be the U.S. postal service, Custom and Border Protection, Military operations abroad, NASA satellite missions and food stamp services.

Student aid operations and federal law enforcement agencies, prisons and detention facilities would also continue to operate, he said.

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