There never was going to be an actual shutdown, the issue was how much drama there would be on or about October 1.

The drama held great risk — for both parties.  If played wrong by Republicans, it could have given Obama a last minute boost — and vice versa.

Via NY Times:

House and Senate leaders reached a tentative agreement on Tuesday that would pay for federal government operations through next March, averting the prospect of a messy government shutdown just before the November elections.

The emerging deal is a sharp contrast to previous occasions when House Republicans used the approach of a spending deadline to insist on deep spending cuts in exchange for their votes, once avoiding a shutdown by a matter of hours. But with the Oct. 1 deadline for enacting spending bills for 2012 coming so close to the election, Republicans leaders were eager to avoid a government crisis that they could be blamed for by voters at the polls.

Under the agreement that takes the spending fight off the table before the presidential and Congressional elections, lawmakers have agreed to a slightly higher rate of spending: $1.047 trillion as opposed to $1.043 trillion. The level was agreed to in last year’s budget deal; some conservative Republicans had pushed to stick with the current rate or less.

Neither side was willing to play chicken, via The Hill:

While appropriators had hoped to wrap up the 2012 spending matter quickly in a lame-duck session, conservatives in the House pushed for a longer-term bill. They are betting on Republicans winning control of the Senate and Mitt Romney winning control of the White House, resulting in them being able to quickly roll back spending and approve policy measures like the defunding of Obama’s healthcare reform law.

Senate Democrats are betting on keeping control of the upper chamber, and did not want the risk of a government shutdown complicating lame-duck talks on taxes and other automatic budget cuts.