WASHINGTON – In a long-awaited breakthrough, Senate leaders closed in on a deal Monday to raise the federal debt ceiling and end a two-week-old government shutdown as Washington scrambled to avoid the nation’s first default on its debt.
With leaders of both parties optimistic that they will soon come together to end the political crisis that has paralyzed Washington, details of the possible agreement began to emerge. It would raise the debt limit until Feb. 15 and fund federal agencies until Jan. 15, with the two sides holding budget talks before a new round of sequestration budget cuts take effect in January, according to people in the Senate familiar with the talks.
The deal would also make minor tweaks to the new health care law, though nothing along the lines of what some conservative Republicans have been demanding. It would require additional safeguards to ensure that people who receive federal subsidies to purchase health insurance under the law are eligible to receive them, the people said.
In exchange for meeting that Republican condition, Democrats are seeking a delay of the law’s so-called “belly button tax” – a tax on existing policies that is set to add roughly $63 per covered person – including spouses and dependents – to the cost of health insurance next year. Under the emerging agreement, the tax would be delayed until 2015, sparing organized labor as well as major employers, the people said.
Negotiators, meanwhile, rejected a Republican proposal to delay a 2.3 percent tax on medical devices that is also part of the Affordable Care Act.
With the talks continuing, Senate Majority Leader Harry Reid, D-Nev., recessed the Senate for the day, and said that he and Senate Minority Leader Mitch McConnell, R-Ky., had made “tremendous progress … but we are not there yet.”
McConnell echoed Reid’s remarks. “We’ve had a good day,” he said. “… I think it’s safe to say we’ve made substantial progress and we look forward to making more progress in the near future.”
Earlier, the Senate talks had been far enough along that the White House postponed a 3 p.m. meeting with Democratic and Republican leaders of the House and Senate to allow the negotiations to proceed.
As the Senate convened for the day, Reid had said on the floor that he was “very optimistic” about what he called the “constructive, good-faith negotiations” aimed at avoiding the nation’s first debt default. McConnell said he expected that “we’re going to get a result that will be acceptable to both sides.”
It was not immediately clear if any agreement would be able to win support in the Republican-led House, though a bipartisan deal would put immediate pressure on House Speaker John Boehner, R-Ohio.
Asked if the emerging Reid-McConnell framework was something Boehner could accept, Sen. Amy Klobuchar, D-Minn., told reporters: “One thing at a time.”
Boehner huddled with McConnell in McConnell’s office Monday afternoon. Michael Steel, a spokesman for Boehner, declined to weigh in on specifics, saying only that the speaker “went to get an update on the discussions.”
As talks intensified, President Obama warned that if the standoff is not resolved by Thursday’s deadline to raise the debt ceiling, “we stand a good chance of defaulting.”
A bipartisan group of senators organized by Sen. Susan Collins, R-Maine, also met for two hours Monday morning. After briefing McConnell, Collins said the group was making progress but that the higher-level talks between Reid and McConnell were more significant in finding a way to resolve the standoff.
The entrenched dispute over government spending began with a battle over whether to link funding for the basic operations to changes in Obama’s signature Affordable Care Act. Republicans changed their focus last week into a fight over extending the debt ceiling, which is the government’s ability to borrow money to pay for bills it has incurred.
Two weeks into the federal government shutdown, with the possibility of a U.S. default looming, the disagreement has expanded to include the issue of broader cuts in existing programs and changes to the mandatory curbs in spending known as the sequester.
“I’m ashamed, and I want to apologize to the American people,” Sen. Joe Manchin, D-W.Va., told CNN’s “New Day,” describing Congress’ seeming inability to forge an agreement.
“This is not what I signed up for.”
The plan being cobbled together by Collins’ group focused on ending the shutdown and raising the $16.7 trillion debt limit.
But Senate Democrats, emboldened by deep divisions among House Republicans and poll data showing the GOP bearing the brunt of the blame for the impasse, rejected the initial proposal because it would allow a new round of sequester cuts to take effect in January.
Reid instead is seeking a quicker deadline on a temporary measure to fund federal agencies and reopen the government, and a longer deadline for raising the debt limit.
“The plan would be, open up the government immediately for a period of time before the sequester hits [on Jan. 15] and then have serious discussions where we might be able to undo the sequester,” Sen. Charles E. Schumer of New York, said Sunday on CBS’s “Face the Nation.”
Schumer noted that House Republicans had already offered to roll back the sequester cuts in a proposal that the White House rejected Friday.
Treasury Secretary Jack Lew has said that if Congress fails to lift the debt limit, he will exhaust his borrowing authority Thursday.
Both parties hopeful crisis will end soon