Government Shutdown: Top Negotiators Close To Reaching Budget Deal (UPDATED)

WASHINGTON -- The top negotiators are within inches of cutting a deal that would keep the government running. The last major obstacle to compromise is funding for Planned Parenthood, The Huffington Post has learned.

Top aides to the president, Senate Majority Leader Harry Reid (D-Nev.) and House Speaker John Boehner (R-Ohio) met until 3 a.m. last night, hashing out nearly all of the deal, in which Democrats would agree to steeper cuts than their proposed $34 billion from current spending. (UPDATE: Reid said Friday morning that Democrats agreed to $38 billion in cuts. See below for more.)

"The last part is Title X," said a senior Democratic source familiar with the talks. Title X refers to funding for Planned Parenthood's many health services for women.

The source refused to put a final number on the cuts. Boehner has argued that the final deal is dependent on digging deeper into spending.

"But they spend hours on the riders," the Democrat said, referring to discussions between White House Legislative Affairs Director Rob Nabors, Reid Chief of Staff David Krone, Appropriations Committee members and Boehner's representatives.

Democrats did agree to accept about a dozen of the riders Republicans attached to the spending measure, but the deal will scrap other highly controversial provisions that aimed to cut EPA regulations, the source said.

President Obama is expected to check in by phone with the two leaders at 10:30 a.m., then the Democratic and Republican caucuses will meet at noon to decide if whether to back the deal.

In order for Democrats to get on board, the source said, the Republican cuts to Planned Parenthood must be removed.

"The cuts will be hard for us to swallow, but we won't bend on Title X," the source said. "Reid doesn't even have to go back to the caucus to ask on that one."

Republicans had offered a compromise in which Senate Minority Leader Mitch McConnell (R-Ky.) would not stand in the way of a Democratic attempt to strip the Title X provision in Senate votes, thus allowing a simple majority vote to remove it.

But Democrats, wary of the uncertainty any vote can face in the Senate, refused.

And even though the measures gutting clean air and water rules are being dropped, the GOP insisted on creating a commission that would study the impacts of robust regulation.

While the new level of the budget cuts will be hard for Democrats to digest, according to a source, the President said he would accept it.

UPDATE, 10:23 AM ET: Reid told reporters on Friday that the deal hinges on a rider to defund Planned Parenthood after leadership agreed to $38 billion in cuts late Thursday night.

"The moving target is focused on women in America.”

Reid said the Democrats had already made a number of concessions, including over the final cuts figure, brushing off claims by House Republicans that the final number was still up in the air.

"The Speaker is the one who came up with the number, we didn't invent it,” he said.

He recounted a moment from the White House on Thursday evening, when Vice President Joe Biden became frustrated at the gridlock over Planned Parenthood funding. Finally, Biden said “Well, fine, let the American people decide this issue then,” according to Reid.

He said the American people had since decided, citing newspaper editorials and a statement by staunch anti-abortion Sen. Pat Toomey (R-Penn.) in support of dropping the measure from the funding deal.

Reid said now compromise will be up to the House GOP.

"We are not bending on women's health,” he said.

With reporting from Elise Foley