WASHINGTON — A month of combat over government spending showed signs on Monday of giving way to a Senate deal to reopen shuttered federal agencies.
Senate Majority Leader Harry Reid, a Democrat, and his Republican counterpart, Mitch McConnell, ended a day of constant talks with optimistic proclamations, as details leaked out of the pact they were negotiating.
“We’ve made tremendous progress,” Reid said at the end of a Senate session during a federal holiday, underscoring the urgency of settling a fiscal crisis that was nearing a Thursday deadline. The U.S. Treasury Department estimates it will reach a $16.7 trillion borrowing limit on Oct. 17.
“We hope that with good fortune ... that perhaps tomorrow will be a bright day,” Reid said, hinting at a possible announcement today of a bipartisan Senate deal.
McConnell, who has been a fierce critic of Reid all year, had a smile on his face.
“We’ve had a good day; had a good day yesterday,” he said of his work with Reid.
The plan under discussion would promptly end a partial government shutdown about to enter its third week.
It also would raise the debt ceiling by enough to cover the nation’s borrowing needs at least through mid-February 2014, according to a source familiar with the negotiations.
Government operations would be funded through the middle of January, keeping in place the across-the-board “sequester” spending cuts that took effect in March, though government agencies would have more latitude to ease their impact. It would also set up a new round of budget talks that would try to strike a bargain by year’s end.
With the Reid-McConnell talks continuing, these details were subject to change, according to Senate aides.
Democrats look to have fended off any major changes to President Barack Obama’s signature health law, something that could fuel resistance — particularly by conservative House Republicans who had insisted on delaying Obamacare as a condition of continued government funding.
House Majority Leader Eric Cantor told reporters that Republican lawmakers will hold a closed-door meeting today “to discuss a way forward, so stayed tuned.”
In an early sign of Republican opposition, Rep. Joe Barton of Texas told reporters: “No deal is better than a bad deal,” as he downplayed the impact of a credit default if the U.S. limit on borrowing is not quickly raised.
But Republican Rep. Peter King of New York said it would be hard for the House not to put it to a vote if it gets strong support from Senate Republicans.
A Washington Post/ABC News poll released Monday found that 74 percent of Americans disapprove of the way congressional Republicans have handled the standoff, compared with a 53 percent disapproval rating for Obama.
The Treasury Department says it cannot guarantee that the U.S. government will be able to pay its bills past Oct. 17 if Congress does not raise the debt ceiling by then. A default would likely come by Nov. 1 as Treasury would not have enough tax revenue coming in to cover interest payments, retirement benefits and other obligations.
It is unclear whether Congress can meet the Thursday deadline.
Though Treasury likely will have enough cash on hand to meet its obligations for a week or so, it might be forced to pay a higher interest rate on debt it is due to issue on Thursday. Because of the uncertainty over U.S. finances, banks and money market funds are already shunning some government securities.