* Deal needs to be in place by middle of next week
* Progress on spending cuts, but policy issues remain
* White House says current plan risks Obama veto (Adds OMB comments, paragraphs 6-7)
By Andy Sullivan
WASHINGTON, March 25 (Reuters) - Healthcare, global warming, birth control and other hot-button political issues are threatening to derail a compromise over U.S. spending cuts, lawmakers and aides said on Friday.
The dispute again raises the possibility of a government shutdown that would force thousands of layoffs and rattle financial markets, even as Republican and Democratic negotiators began to bridge a $50 billion gap between their rival spending plans.
Aides said the closed-door talks were initially productive. But leaders from both parties later issued sharply worded statements that any shutdown would be the fault of the other.
"The status quo is unacceptable, and right now that is all Washington Democrats are offering," said House Speaker John Boehner.
"The House Republican leadership is back to agonizing over whether to give in to right-wing demands that they abandon any compromise on their extreme cuts," Democratic Senator Charles Schumer said.
The White House budget office said the House plan raised "extreme social policy issues that have nothing at all to do with reducing spending or reducing the deficit" while cutting research and education spending needed for economic growth.
"The President said he would veto the bill if it got to him in this form, and we need to work together to find a reasonable compromise," said Meg Reilly, a spokeswoman for the Office of Management and Budget.
TIME RUNNING OUT
The U.S. government has been operating on a temporary extension of last year's budget since Oct. 1 because lawmakers have been unable to resolve a partisan debate over spending.
Time is running short. Lawmakers have only a few days to resolve the impasse when they return to Washington next week.
Pressured by Tea Party fiscal conservatives, Republicans want to keep a campaign promise to scale back government, while Democrats worry cuts could imperil the economic recovery.
But Republicans also hope to use their power of the purse to prevent Democratic President Barack Obama from pursuing policies they do not like. Those range from the healthcare overhaul passed last year to restrictions on greenhouse gas emissions and denying funding to Planned Parenthood, a birth-control group that also provides abortions.
A spending bill passed by the Republican-controlled House includes roughly 30 such restrictions, which are unlikely to pass a Democratic-led Senate or make it past Obama's veto pen.
A bill free of policy restrictions would be a tough sell for Boehner, who owes his job to the dozens of conservative lawmakers aligned with the Tea Party movement.
"There is no way a bill without policy restrictions can pass the House," a Republican leadership aide said.
Adding further pressure from the right, Tea Party activists plan a rally at the Capitol building next Thursday.
A stopgap measure keeps the government running through April 8. But any deal will have to be in place well before then to allow enough time for it to pass through both the House of Representatives and the Senate.
If there is no deal by the middle of next week, lawmakers will have to decide whether to pass another stopgap measure or dig in their heels and prepare for a shutdown, aides said.
Passing another stopgap measure could be difficult after lawmakers already approved two extensions this year. Senior legislators from both parties have said they will not vote for another extension, and 54 conservative House Republicans refused to back the most recent one.
"The sense is we're kind of cruising towards a shutdown," one Democratic aide said. (Additional reporting by Roberta Rampton; Editing by Peter Cooney)
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