Senate Leaders Say They’re Optimistic on U.S. Debt-Cap Accord
U.S. Senate Democratic and Republican leaders said they are optimistic about ending a partial government shutdown and preventing the nation from breaching the 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. 15, according to a Senate source familiar with the talks, who spoke on condition of anonymity to discuss them. A delay or repeal of the medical device tax isn’t part of the deal, said that source and a Senate Democratic aide who also requested anonymity.
“I’m very optimistic that we will reach an agreement that’s reasonable in nature this week,” Majority Leader Harry Reid said today following talks with Minority Leader Mitch McConnell. McConnell said he shares Reid’s optimism.
The movement toward a deal in the Senate today marked the strongest signals yet that Congress may be able to increase U.S. borrowing authority before it lapses Oct. 17 and end the shutdown that started Oct. 1.
U.S. stocks rose amid signs of progress in Congress. The Standard & Poor’s 500 Index advanced 0.2 percent to 1,707.16 at 3:49 p.m. in New York while the Stoxx Europe 600 Index erased earlier declines and added 0.2 percent at the close.
The U.S. cash bond market is 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 delays in the Senate and 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.
If Congress does nothing, the federal government would start missing payments sometime between Oct. 22 and Oct. 31, according to the Congressional Budget Office.
President Barack Obama postponed a 3 p.m. meeting 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 tonight at 5:45 p.m., said a party aide speaking on condition of anonymity.
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.
A Reid-McConnell deal won’t be reached until later this afternoon at the earliest, said a Senate Democratic aide who spoke on condition of anonymity to discuss the private talks.
The leaders are debating the length of a stopgap spending bill and debt limit increase, the aide said. 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. 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.
“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.
“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 across-the-board cuts known as 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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