Senate reports progress on debt deal

WASHINGTON — Both President Barack Obama and the top Democrat in Congress reported progress Monday toward a deal to avoid a threatened default and end a two-week partial government shutdown, as Obama called for a meeting with congressional leaders at the White House to press for an end to the impasse

WASHINGTON — Both President Barack Obama and the top Democrat in Congress reported progress Monday toward a deal to avoid a threatened default and end a two-week partial government shutdown, as Obama called for a meeting with congressional leaders at the White House to press for an end to the impasse.

Congress’ failure to pass a bill temporarily funding the government led to the partial shutdown on Oct. 1, the first in 17 years. And if Congress doesn’t approve a separate measure by Thursday increasing the debt ceiling — the amount of money the government is allowed to borrow — the Obama administration says it risks default. The two normally routine pieces of legislation have become entangled in disputes over Obama’s health care overhaul and government spending.

Under discussion is an increase in the debt limit so the government can continue paying its bills well into next year and a short-term funding measure that would re-open the government.

Visiting a Washington charity, Obama mentioned the possible progress in the Senate and said a meeting at the White House will determine whether it’s real. The meeting was originally scheduled for Monday afternoon but was later postponed to give Senate leaders more time to negotiate.

“There has been some progress on the Senate side, with Republicans recognizing it’s not tenable, it’s not smart, it’s not good for the American people to let America default,” he said while visiting a Washington charity that has retained furloughed government workers as volunteers.

Otherwise, he warned, the threat of default was legitimate.

“If we don’t start making some real progress both in the House and the Senate, and if Republicans aren’t willing to set aside some of their partisan concerns in order to do what’s right for the country, we stand a good chance of defaulting,” he said.

After meeting twice Monday with his Republican counterpart, Democratic Majority Leader Harry Reid opened the Senate session by saying he was “very optimistic we will reach an agreement this week that’s reasonable in nature.” Moments later, Republican leader Mitch McConnell seconded Reid’s view.

They spoke after what McConnell termed “a couple of very useful discussions.”

While Reid said there was not yet an accord, he said he hoped to have a proposal to outline when the leaders of Congress meet with Obama at mid-afternoon.

Reid and McConnell — veteran senators hardened by several budget disputes and years of negotiations — are at an impasse over yet another source of fiscal fighting: the automatic, across-the-board spending cuts known as sequestration and whether to undo or change them as part of a budget deal. Democrats are pressing for a higher amount of spending, while Republicans want to keep the spending at the deficit-cutting level of the 2011 law, the result of that year’s high-stakes budget battle.

Officials in both parties said House and Senate negotiators would be appointed to seek a deficit-reduction agreement that could ease or eliminate a new round of automatic spending cuts scheduled to take effect in January. While the current round of cuts fell on both domestic programs and defence, the upcoming reductions would hit primarily the Pentagon.

The officials said the two leaders were discussing legislation to raise the $16.7 trillion debt limit until spring. It was not clear if that would permit Treasury Secretary Jacob Lew to employ a series of steps that could add additional months to the extension, as administrations in both parties have done in recent years.

In addition to raising the debt limit and reopening the government, officials said, the two leaders were discussing a possible tightening in income verification requirements for individuals who qualify for subsidies under the health-care law known as Obamacare. Democrats were resisting a Republican-backed proposal to suspend a medical device tax that was enacted as part of the health care law. The tax is widely unpopular among lawmakers in both parties, but the outcome of that disagreement remained unclear.