Both sides hopeful US debt ceiling deal can be done

US senators said they were closing in on a deal yesterday that would reopen the government and push back a possible default for several months, though many hurdles remained as a Thursday deadline drew near.

Ahead of a meeting with President Barack Obama, the Senate's top Democrat and top Republican both said they were optimistic they could soon reach an agreement that would allow them to avert a default and end a partial government shutdown that has dragged on for 14 days so far.

"I'm very optimistic that we will reach an agreement that's reasonable in nature this week," Senate Democratic leader Harry Reid said on the Senate floor.

Mr Reid and Republican counterpart Senator Mitch McConnell were due to meet at the White House later with Mr Obama, vice president Joe Biden, House of Representatives speaker John Boehner, and House Democratic leader Nancy Pelosi.

Any deal would also have to win approval in the House, where conservative Republicans have insisted any continued government funding must include measures to undercut Obama’s signature health law – a nonstarter for Democrats.

The White House meeting was postponed to give more time for negotiations.

“My hope is that a spirit of co-operation will move us forward in the next few hours,” Mr Obama said after visiting a charity organisation for low-income families where some furloughed government workers have been volunteering.

The plan under discussion would raise the $16.7 trillion debt ceiling by enough to cover borrowing needs into 2014, according to Senate aides. It also would fund government operations until January 15th, keeping in place the across-the-board “sequester” cuts that took effect in March.

The deal would not resolve the disagreements over long-term spending and healthcare that led to the crisis in the first place. It would amount to a clear retreat for Republicans who have sought to tie any continued funding and borrowing authority to measures that would undercut Obama’s signature Affordable Care Act. Still, Mr McConnell echoed Mr Reid’s comments that a deal could come together soon. “I share his optimism that we’re going to get a result that will be acceptable to both sides,” he said.

November looms
The treasury department says it cannot guarantee the US government will be able to pay its bills past October 17th if Congress does not raise the $16.7 trillion debt ceiling by then. A default would likely come by November 1st as treasury would not have enough tax revenue to cover interest payments, retirement benefits and other obligations.It is unclear whether Congress can meet that deadline.

Republican leaders face pressure from a vocal conservative flank deeply reluctant to make concessions to Mr Obama and his Democrats.– (Reuters)