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 "belly button tax" - a levy 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 controversial 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."
Earlier, the Senate talks were far enough along that the White House postponed a 3 p.m. meeting with Democratic and Republican leaders of both houses to allow 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 whether any agreement would win support in the Republican-led House, though a bipartisan deal would put immediate pressure on House Speaker John Boehner (R., Ohio).
As talks intensified, President Obama warned that if the standoff was 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 that 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. It morphed 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 a U.S. default looming, the disagreement expanded to include 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' impasse. "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 most 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 [Jan. 15] and then have serious discussions where we might be able to undo the sequester," Sen. Charles Schumer of New York, the No. 3 Democrat in the Senate, 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. That plan would have immediately suspended enforcement of the debt limit and reopened the government in exchange for a plan to replace sequester savings in 2014 (and perhaps longer) with reductions to Social Security and Medicare proposed in Obama's budget.
"That was one place where the House Republicans and the president were not . . . at total loggerheads," Schumer said, suggesting a deal could be cut if Republicans consider new revenue along with cuts to entitlement programs.
The sequester cuts are part of $2.1 trillion in spending over 10 years included in the Budget Control Act, which raised the debt limit in 2011. Initially, Republicans wanted to replace the sequester, particularly the Pentagon portion. But since Obama won tax hikes on the wealthy as part of a year-end fight over the "fiscal cliff," McConnell has cast the sequester as a major GOP victory from which the party cannot retreat.
ELEMENTS OF A DEAL?
Proposals under discussion by the Senate's top two leaders included:
Legislation to raise the government's
debt limit until mid-February.
Appointment of House and Senate negotiators to seek
a deficit-reduction agreement that could ease or eliminate
a new round of automatic federal spending cuts scheduled to begin
in January.
A possible tightening in income-verification requirements for individuals who qualify for subsidies under the Affordable Care Act, known as Obamacare.
Repealing a fee the health-care law levies on companies that provide coverage. The cost is set at $63 per person covered for 2014 and is estimated to fall to about $40
by 2016 before
it disappears. - AP
MORE COVERAGE
An agreement with no changes to the Affordable Care Act could marginalize the tea party. A8.
Investors worried? "Doomsday
is nigh," one market analyst says, "and everyone shrugs." A9.
Harrisburg group plans to place posters outside the offices of area congressmen. B1.
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