Senate deal on U.S. debt limit emerging as time runs short

Senate leaders are poised to reach an agreement as early as today to bring a halt to the fiscal standoff, and now must race the clock to sell the plan to lawmakers before U.S. borrowing authority runs out this week.

The emerging deal would stave off a potential default, end the 15-day-old government shutdown and change the immediate deadlines in favor of three new ones over the next four months. It’s far from complete as the Senate may delay passing the plan and House Republicans may seek to block or change it.

Lawmakers would be required to hold budget talks by Dec. 13, fund the government through Jan. 15, 2014, and extend the nation’s borrowing authority until Feb. 7, 2014, according to a person familiar with the Senate talks who spoke on condition of anonymity to discuss the concept.

“We’ve made tremendous progress,” Senate Majority Leader Harry Reid, a Nevada Democrat, said yesterday on the Senate floor with his Republican counterpart, Mitch McConnell of Kentucky. “We are not there yet.”

An agreement would forestall the immediate crisis. It would end the shutdown that has closed many federal services and prevent a possible U.S. default that the Treasury Department said may be catastrophic.

U.S. lawmakers, who have governed from fiscal crisis to fiscal crisis for more than two years, may be setting up more crises in the near future. The agreement would delay the next major deadline -- the Jan. 15 lapse in government funding -- until after the holiday shopping season.

Potential Obstacles

There are two potential obstacles to an agreement. First, a single senator would be able to use procedural tactics to push a final vote past the Oct. 17 lapse in borrowing authority. Texas Republican Senator Ted Cruz, who spoke for more than 21 hours during a budget debate last month, wouldn’t rule out stalling maneuvers, saying he wants to see the details of the plan.

Also, House Republicans, who have demanded major changes to President Barack Obama’s signature health-care law, may resist any proposal that contains few of their priorities.

“Sounds like everything the president asked for,” Representative Blake Farenthold, a Texas Republican aligned with the Tea Party movement, said yesterday when asked about the Senate framework.

Obama has insisted that Congress raise the $16.7 trillion U.S. debt limit without add-ons and that stopgap spending bills be free of policy conditions.

Page 1 of 3 >>

Copyright 2014 Bloomberg. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

Comments
comments powered by Disqus