Oct. 14 (Bloomberg) -- President Barack Obama summoned the four congressional leaders to the White House as Senate Majority Leader Harry Reid said lawmakers are “closer” to ending a partial government shutdown and preventing U.S. borrowing authority from lapsing in three days.
Reid told reporters at the Capitol today that he and Minority Leader Mitch McConnell are closer to an agreement though they haven’t reached one yet.
Obama is set to meet at 3 p.m. with Reid, McConnell, House Speaker John Boehner and House Minority Leader Nancy Pelosi. Senator Joe Manchin, a West Virginia Democrat, said as he left Reid’s office that he expected the Senate leaders to present an agreement to Obama at the meeting.
The movement today in the Senate marked some of the strongest signals yet that Congress may be able to reach a deal to increase U.S. borrowing authority before it lapses Oct. 17. Any proposal could face days of procedural delays in the Senate and an uncertain path in the Republican-controlled House, where Boehner would have to decide whether to allow a vote or make changes.
If Congress does nothing, the federal government would start missing payments sometime between Oct. 22 and Oct. 31, according to the Congressional Budget Office.
Don Stewart, a McConnell spokesman, said the leaders are engaged in “good-faith negotiations” and Obama said during a visit to a Washington nonprofit group today that “there has been some progress” in the Senate.
“It’s not put together until it’s put together,” said Senator Max Baucus, a Montana Democrat. “But I am quite confident it will be put together before the debt limit is reached and before things start to go haywire.”
U.S. stocks trimmed earlier declines amid signs of progress on an accord that would end the government shutdown and increase borrowing authority.
The Standard & Poor’s 500 Index advanced 0.1 percent to 1,704.82 at 1:23 p.m. in New York while the Stoxx Europe 600 Index reversed earlier declines and added 0.2 percent at the close.
The U.S. cash bond market is closed for Columbus Day. Gold gained 0.9 percent and natural gas jumped to the highest level in almost four months.
The Senate convenes at 2 p.m. in Washington with votes unrelated to fiscal issues planned for 5:30 p.m.
In the House, Republican leaders are weighing whether to bring up their plans for a short-term debt limit increase, said two aides who spoke on condition of anonymity to discuss strategy.
House Republicans will meet at 9 a.m. tomorrow to discuss the details of that proposal, which is expected to include policy conditions that Obama says he can’t accept.
“Things are back in the middle of the road on the Senate side,” Senator Bob Corker, a Tennessee Republican, told reporters in Washington. “There’s an opportunity today to bring that to a conclusion and to begin moving something off the Senate floor in a bipartisan way.”
The congressional deadlock over increasing the U.S. debt ceiling from $16.7 trillion is threatening the U.S. and world economies, International Monetary Fund Managing Director Christine Lagarde said yesterday in Washington.
McConnell, in a statement yesterday, urged Democratic leaders to support a plan, based on one drafted by Republican Senator Susan Collins of Maine, which Democrats rejected Oct. 12.
The initial Collins proposal included a stopgap spending bill through March, a debt-limit increase into January and a two-year repeal of an excise tax on medical devices. Collins’s plan sought to give federal agencies more flexibility under the across-the-board cuts known as sequestration.
The plan also would have set a mid-January deadline for longer-term budget talks and made two changes to Obama’s health-care plan and required his administration to verify income levels for enrollment in health insurance.
Democratic leaders want a longer debt-limit increase and a shorter extension of government funding at Republican-preferred levels. They also oppose attaching policy conditions to the spending bill or debt limit increase, calling it a ransom for Congress to do its job.
Six senators working with Collins -- Democrats Manchin, Heidi Heitkamp of North Dakota, Mark Pryor of Arkansas, Amy Klobuchar of Minnesota and Joe Donnelly of Indiana and independent Angus King of Maine -- yesterday said they don’t support the proposal in its current form.
“This week, if we don’t start making some real progress both in the House and the Senate, and if Republicans aren’t willing to set aside some of their partisan concerns in order to do what is right for the country, then we stand a good chance of defaulting,” Obama said.
The Senate negotiations include discussions of easing the spending caps imposed by sequestration. Richard Durbin of Illinois, the second-ranking Democrat in the Senate, said there is a $70 billion spending gap between Democrats and Republicans.
Democrats don’t want to lock in lower spending levels for most of the 2014 fiscal year, which began Oct. 1. They have been willing to accept the lower numbers through Nov. 15.
Disagreement over spending is the big sticking point, said Jim Manley, a former aide to Reid. Manley, in a telephone interview, said he’s watching “to see if Senator McConnell demands some sort of fig leaf from Senator Reid to protect the speaker or whether he’s prepared to throw him overboard to get this all behind him.”
Representative Tim Huelskamp, a Kansas Republican, played down the importance of the deadline and said the White House “is trying to scare the markets.”
“Oct. 17 is a date that won’t have a major impact unless the White House can create concern about that,” Huelskamp said yesterday on CBS’s “Face the Nation.”
A Senate deal probably would face the prospect of a hostile reception from House Republicans still seeking to curtail Obamacare and opposed to easing spending caps.
Republican strategist Ron Bonjean yesterday described the latest efforts to find a way out of the impasse as “a Rubik’s Cube from hell,” adding that even if the Senate passes a plan, it would be “still pretty much a jump ball in the House.”
“They may simply reject it without offering a Plan B,” Bonjean, a one-time aide to former Republican Speaker Dennis Hastert, said in a telephone interview.
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