U.S. government shutdown: Senate leaders closing in on deal

In a long-awaited breakthrough, Senate leaders closed in on a deal Monday to raise the U.S. federal debt ceiling and end the two-week-old government shutdown.

WASHINGTON—Two weeks into a budget impasse that has left Americans dismayed by Washington brinkmanship , an outline of a deal emerged Monday as Senate leaders worked to prevent a potentially catastrophic debt default and end the damage inflicted by the lingering government shutdown.

Details remained in flux, but Senate aides said it would give the government authority to borrow to pay its bills into February and would reopen federal agencies until Jan. 15.

In the meantime, to prevent another shutdown, a House-Senate committee would negotiate an overarching budget agreement by Dec. 13 that would allow Congress to pass its regular bills to fund the government.

The proposal would not make significant changes in President Barack Obama’s health care law. But it could include a pair of tweaks: the delay of a new tax opposed by labor unions and an income verification requirement for customers who buy insurance through the new online marketplaces.

Senate Majority Leader Harry Reid and Minority Leader Mitch McConnell need to win the support of their party caucuses on Tuesday, and momentum could be stalled by a tea party filibuster. The proposal would also face major hurdles in the House, where conservative Republicans are likely to oppose it. But it appeared increasingly likely that the stalemate would end soon.

Activity swirled around the Capitol offices of Reid and McConnell, with intense talks underway three days before Thursday’s deadline to raise the nation’s $16.7-trillion borrowing capacity and avert a potential default.

“We’ve made tremendous progress,” Reid said as he closed the Senate in the evening, counselling patience. “Perhaps tomorrow will be a bright day. We’re not there yet. We hope it will be.”

The usually straight-faced McConnell echoed the sentiment, smiling briefly. “We had a good day,” he said. “It’s safe to say we made substantial progress, and we look forward to making more progress in the near future.”

The president had summoned the two Senate leaders, as well as House Speaker John A. Boehner and Minority Leader Nancy Pelosi, to the White House Monday, but the session was postponed — a sign the administration was optimistic that Senate negotiators were making progress on a way out of the standoff.

“There’s been some progress on the Senate side, with Republicans recognizing it’s not tenable, it’s not smart, it’s not good for the American people to let America default,” Obama said during a visit to Martha’s Table, a food bank in Washington.

A potential filibuster could prolong the debate. But experts have said the promise of a deal could calm the restless financial markets. Sen. Ted Cruz, the Texas Republican who spearheaded the drive to kill or delay Obamacare using the government-funding bill, held out the possibility that he would filibuster, but said, “I want to wait to see what the details are.”

Any Senate deal is expected to hit turbulence in the House. Boehner’s GOP majority has resisted compromise as the hard-right flank sought to use the usually routine budget bills as leverage in their failed campaign to stop Obamacare.

House Republicans have become increasingly resentful of having legislation forced upon them by the Senate. With the debt deadline fast approaching and the GOP suffering heavily in the polls for its handling of the crisis, Boehner may have little opportunity to amend the package — even if he could unite his troops around a common approach.

Congress faces a two-pronged problem: It must vote to lift the debt limit and to fund the government. On Tuesday, the federal government shutdown, which is harming the economy, will enter its third week.

The outlines of the deal would solve both issues, but only temporarily.

The proposal to lift the debt limit until sometime in February is longer than Republicans had sought but far shorter than Democrats had wanted. Democrats wanted to extend it through next year to ensure the issue would not come up until after the November 2014 midterm elections.