Oct. 16 (Bloomberg) -- Congress is poised to end the 16-day government shutdown and raise the U.S. debt limit after the leaders of the Senate reached a bipartisan agreement to end the nation’s fiscal impasse.
The Senate is scheduled to vote at 5:30 p.m., said a Democratic aide on condition of anonymity. The House plans to vote on the deal later today, and the White House press secretary said President Barack Obama supports the agreement.
House Speaker John Boehner said in a statement that Republicans won’t block the compromise.
“We fought the good fight,” Boehner, a Republican, said today on WLW, a radio station in his home state of Ohio. “We just didn’t win.”
The deal concludes a four-week fiscal standoff that began with Republicans demanding defunding of Obama’s 2010 health-care law and objecting to raising the debt limit and funding the government without attaching policy conditions. They achieved almost none of those goals in the agreement.
“This is far less than many of us had hoped for, frankly, but it’s far better than what some had sought,” said Mitch McConnell, the Senate minority leader, who said the measure retains Republican-preferred spending levels.
The framework negotiated by Majority Leader Harry Reid and McConnell would fund the government at those Republican-backed levels through Jan. 15, 2014, and suspend the debt limit until Feb. 7, setting up another round of confrontations then.
“This agreement achieves what is necessary,” said Jay Carney, the White House press secretary.
The Senate accord was unveiled a day after Fitch Ratings put the U.S. AAA credit grade on ratings watch negative, citing the government’s inability to raise the debt ceiling in a timely manner, according to a statement after markets in New York closed.
U.S. stocks rallied, sending the Standard & Poor’s 500 Index toward a record. The benchmark index rose 1.4 percent to 1,721.47 at 4 p.m. in New York after sliding 0.7 percent yesterday. The Dow Jones Industrial Average rose 205.82 points, or 1.4 percent, to 15,373.83.
Rates on Treasury bills tumbled and yields on government notes and bonds fell. One-month rates fell 21 basis points, or 0.21 percentage point, to 0.13 percent at 4:06 p.m. in New York after touching 0.45 percent, the highest since October 2008, according to data compiled by Bloomberg. The benchmark 10-year yield fell six basis points to 2.67 percent, according to Bloomberg Bond Trader data.
“The compromise we reached will provide our economy with the stability it desperately needs,” Reid said.
The partial shutdown has closed national parks, slowed clinical drug trials and led to the furlough of thousands of federal workers. The Senate proposal would provide back pay for furloughed workers, said a Democratic aide speaking on condition of anonymity to discuss the plan.
The shutdown took at least $24 billion out of the U.S. economy, S&P said in a report today.
The U.S. Chamber of Commerce, the country’s largest business group, supports the agreement. Several small-government groups, including the Club for Growth and Heritage Action for America, are urging lawmakers to vote against the accord.
Senator Amy Klobuchar, a Minnesota Democrat, said on Bloomberg Television that the agreement will attract about 70 votes in the Senate, where Democrats have a 54-46 majority.
House Republicans met for about 30 minutes, and Boehner didn’t speak to reporters as he left the session. The speaker received a standing ovation at the meeting, said Representative Lynn Westmoreland, a Georgia Republican.
“Everybody appreciates what the speaker has done up till now and the whole leadership stuck together,” Westmoreland said.
Under the Senate agreement, House Republicans achieved almost none of their priorities.
“If there is a silver lining in this cloud, it’s that hopefully this debacle means that the power of those that favor confrontation has peaked,” Senator Charles Schumer, a New York Democrat, said in a statement.
Republicans persisted after the partial government shutdown started Oct. 1 and their approval ratings dropped in polls. Hardliners resisted plans that didn’t make major changes to the Patient Protection and Affordable Care Act.
Obama described those requests for health-law changes as unacceptable ransom demands and insisted that Republicans relent.
Senator Kelly Ayotte, a New Hampshire Republican, questioned some other Republicans’ approach to the health law.
“If they’re saying the defunding issue is going to come up again in three months, then they’ve learned nothing from this,” she said. “I hope we learned that we shouldn’t get behind a strategy that cannot succeed.”
Senator Ted Cruz, a Texas Republican who spoke against the health law for 21 hours last month, said he will continue to fight to make “Washington respond to the very real harms that Obamacare is causing.” He said he wouldn’t delay a Senate vote.
Some House Republicans said they wouldn’t vote for the Senate agreement.
“You will definitely see a split vote tonight,” said Thomas Massie, a Kentucky Republican. “I have one vote: I am going to vote no.”
Massie said the House leadership team will support the bill.
The Senate agreement trades the pressing and already-missed deadlines for new ones over the next four months. The Treasury Department would be allowed to use so-called extraordinary measures to delay default for about another month beyond Feb. 7, said a Senate Democratic aide who spoke on condition of anonymity to discuss the plan.
“It would appear as though we’re kicking the can down the road one more time,” Representative Jim Bridenstine, an Oklahoma Republican, said in an interview. “It’s a problem. Neither side is negotiating so we kicked the can and now we’re going to have to deal with it.”
A Republican-backed provision in the agreement requires the Health and Human Services Secretary, Kathleen Sebelius, to certify that the government is able to verify the incomes of people who apply for government subsidies to help pay their insurance premiums under the Affordable Care Act, one Senate aide said, speaking on condition of anonymity before the release of the bill.
The inspector general for Sebelius’s department would have to verify her certification, the aide said. In the meantime, the exchanges could continue to sell insurance.
Carney said the income-verification provision wasn’t a ransom.
Without action by Congress, U.S. borrowing authority would lapse at the end of tomorrow, leaving the Treasury Department with only $30 billion in cash and incoming revenue to make promised payments. The U.S. would begin missing payments between Oct. 22 and Oct. 31, according to the Congressional Budget Office.
Boehner tried several times over the past month to construct a debt-limit measure that House Republicans could support, though he didn’t bring any proposals to a vote. Republicans didn’t have enough support for the measure yesterday, said a leadership aide who spoke on condition of anonymity to discuss vote-counting.
To contact the reporters on this story: Richard Rubin in Washington at email@example.com; Kathleen Hunter in Washington at firstname.lastname@example.org; Roxana Tiron in Washington at email@example.com
To contact the editor responsible for this story: Jodi Schneider at firstname.lastname@example.org