Oct. 14 (Bloomberg) -- Senate Democratic and Republican leaders said they made significant progress toward an accord that would end a partial government shutdown and prevent the nation from breaching the U.S. debt ceiling in three days.
The emerging agreement would suspend the debt limit through Feb. 7, 2014, fund the government through Jan. 15 and require a House-Senate budget conference by Dec. 13, according to a Senate source familiar with the talks, who spoke on condition of anonymity to discuss them.
“We’ve made tremendous progress,” Majority Leader Harry Reid, a Nevada Democrat, said as the Senate adjourned today. “We are not there yet.”
Reid said he hoped a deal could be announced tomorrow. His Republican counterpart, Mitch McConnell of Kentucky, said “substantial progress” had been made during the talks.
The movement toward working out a deal in the Senate marked the strongest signals yet that Congress may be able to prevent the U.S. from missing scheduled payments as soon as this month and end the partial shutdown that started Oct. 1.
U.S. stocks rose and the Standard & Poor’s 500 Index advanced 0.4 percent to 1,710.21 at 4 p.m. in New York, leaving it 1 percent from a record. The U.S. cash bond market was closed for Columbus Day. Gold advanced the most in a week and natural gas jumped to the highest level in almost four months.
Any proposal could face procedural obstacles in the Senate. Republican Senator Ted Cruz of Texas, who has insisted that any spending bill make major changes to the 2010 health care law, wouldn’t say today whether he would delay action, saying that he was awaiting details. Cruz on Sept. 25 ended a 21-hour speech in the Senate against the health law.
“I think we need to get an agreement and open government back up,” Senator Rand Paul, a Kentucky Republican, told reporters at the Capitol today. “I think very little is going to happen. I think the status quo is going to be pushed out. But in some ways that may be somewhat good just to get the government open and to get us to continue negotiations.”
A Senate deal would also encounter an uncertain path in the Republican-controlled House, where Speaker John Boehner would have to decide whether to allow a vote or make changes.
Boehner spent 25 minutes in McConnell’s office this afternoon. Senator Joe Manchin, a West Virginia Democrat, said Senate leaders hoped to get 65 votes for an agreement to help Boehner with his caucus.
If Congress does nothing, the federal government would run out of borrowing authority on Oct. 17 and start missing payments sometime between Oct. 22 and Oct. 31, according to the Congressional Budget Office.
The accord being worked out would exclude the delay or repeal of the medical device tax sought by Republicans, said the source familiar with the talks and a Senate Democratic aide who also requested anonymity.
The aide said the agreement probably would bar the Treasury Department from using extraordinary measures to continue borrowing beyond Feb. 7, removing the flexibility the agency used for five months this year to pay government bills.
Republican demands to ban extraordinary measures is a sticking point in the talks, Senate Finance Committee Chairman Max Baucus, a Montana Democrat, said in an interview.
The plan also would postpone a reinsurance fee the government is levying on health plans for the first three years of the health-care exchanges -- amounting to $63 per worker next year, said the source familiar with the talks. Labor unions have asked for the delay.
The fee was devised to help offset costs of expanding health coverage and create a pool that would pay when insurers can’t cover the uninsured who enrolled in plans because not enough healthy people were paying into the system.
The agreement also would give federal agencies flexibility to manage the across-the-board cuts known as sequestration if they occur in 2014.
President Barack Obama postponed a meeting today with Reid, McConnell, Boehner and House Democratic Leader Nancy Pelosi to “allow leaders in the Senate time to continue making important progress” toward a deal, according to a White House statement. Senate Republicans are set to meet at 11 a.m. tomorrow after postponing a 5:45 p.m. meeting today, said a party aide speaking on condition of anonymity.
In the House, Republican leaders are weighing whether to bring up 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.
The leaders debated the length of a stopgap spending bill and debt-limit increase, said a Senate Democratic aide who spoke on condition of anonymity to discuss the private talks. Democrats want a longer debt-limit increase and a shorter spending bill at Republican-preferred levels. Republicans want the reverse, the aide said.
There is little if any discussion of major changes to the 2010 health care law. House Republicans’ demands for those changes, such as a delay in the mandate for individuals to purchase health insurance, led to the shutdown 14 days ago.
Obama has insisted that no policy conditions be attached to a spending bill or debt-limit increase.
Republicans have been trying to include delay of an excise tax on medical devices and language requiring income verification for people receiving health-insurance subsidies, the aide said. The verification language is likely to be included, the source familiar with the talks said.
Democrats want specific concessions if they agree to either of those items, the Democratic aide said.
Democrats want offsetting revenue increases, and a full repeal of the tax would cost about $30 billion in forgone revenue. They are also wary of setting a precedent for other industries that were taxes in the Patient Protection and Affordable Care Act.
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.
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.
To contact the reporters on this story: Richard Rubin in Washington at firstname.lastname@example.org; Kathleen Hunter in Washington at email@example.com; Chris Strohm in Washington at firstname.lastname@example.org
To contact the editor responsible for this story: Jodi Schneider at email@example.com