The news comes with scant time left before the debt ceiling expires. Senate leaders close to finishing deal

Senate Majority Leader Harry Reid and Senate Minority Leader Mitch McConnell are finalizing a deal to avert a debt default and reopen the government, capping a frantic day that had Washington bracing for an economic crisis of its own making.

The deal is essentially done, sources say, as aides for the two leaders finished drafting the legislative language Tuesday night. The Senate adjourned at about 10 p.m. with no official word on a deal and will reconvene at noon Wednesday.


Reid and McConnell are expected to brief their respective caucuses Wednesday, hours before the country could fail to pay its bills for the first time in history. Cooperation will be needed from members of both parties in order to avoid default as well as to end the first government shutdown in 17 years. And a Senate plan will need to clear the House, which has struggled to pass any bill to raise the national debt limit.

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It remains to be seen whether Washington can end a growing national crisis that has alarmed world leaders and spooked financial markets. But the fact that the two deal-making Senate leaders have restarted negotiations lifted the spirits of senators after the House shelved plans to move its own proposal that had drawn the scorn of the White House.

“Things look a lot better than they did several hours ago,” Sen. Chuck Schumer (D-N.Y.) said.

“In order to move this quickly tomorrow or as soon as possible thereafter we need the cooperation of members,” said Senate Majority Whip Dick Durbin (D-Ill.), who said a deal is “close.” “If they want to drag their feet, use every objection they can, it’s going to take a few days.”

Under the plan, a $986 billion government funding bill would reopen federal agencies until Jan. 15, and the debt ceiling would be lifted until Feb. 7. The two parties would be given the opportunity to cut a larger-scale budget agreement to slash future deficits as a bicameral conference committee would have until Dec. 13 to finalize such a deal.

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Democrats won a major White House priority to ensure that the Treasury Department would still have the ability to use “extraordinary measures” to pay its bills in case Congress does not lift the debt ceiling by Feb. 7. Republicans would win a provision ensuring that recipients of Obamacare subsidies meet the required income levels.

And several sources said the deal drops a Democratic priority: No delay of an Obamacare reinsurance tax sought by labor unions, known as the “belly-button tax.” Back pay for federal workers furloughed by the government shutdown will also likely be included in the agreement, according to a Democratic aide familiar with the talks.

But the deal punts many of the major issues over deficits and spending, including over whether to lock in 2014 funding levels at $967 billion once the next round of sequestration cuts take effect in January.

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Overall, though, the deal marks a major concession for Republicans, given that the initial fight over the shutdown was started due to demands from conservatives that any government funding bill also gut Obamacare. Under the emerging agreement, Obamacare would escape largely unscathed.

Top Republicans said Tuesday it was time to end what had emerged as a politically disastrous episode for their party.

“The only reason why the Democrats don’t look terrible is we look even worse,” said Sen. Roy Blunt (R-Mo.), a member of Senate GOP leadership.

Reid and McConnell were already close to finalizing an agreement before the leaders were forced to enter a holding pattern while House Speaker John Boehner (R-Ohio) tried to get House Republicans to pass their own plan to raise the debt ceiling and reopen the government. That plan had additional Obamacare concessions and would prohibit Treasury from using the “extraordinary” authority to extend the debt ceiling deadline.

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But it failed due to a conservative revolt and opposition from Democrats, marking a major embarrassment for Boehner and forcing the two Senate leaders to restart talks with the Thursday debt ceiling deadline approaching rapidly.

More than ever time is working against Reid and McConnell after the two longtime Senate rivals lost a day of negotiations and Senate floor time thanks to the House’s fruitless effort to devise a bill that could attract the support of the House Republican majority.

“Given tonight’s events, the leaders have decided to work toward a solution that would reopen the government and prevent default. They are optimistic an agreement can be reached,” said Don Stewart, a spokesman for McConnell.

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Adam Jentleson, Reid’s spokesman, echoed those sentiments.

A Reid-McConnell deal that barely lays a finger on Obamacare won’t be looked at kindly by House Republicans, but Boehner may not have a choice given that the prospects of default deepen with each minute.

If the majority and minority leaders are able to strike a deal, the entire Senate will have to agree to expedite the votes ahead of exceeding the Thursday deadline, when the Treasury Department warns all “extraordinary measures” will become exhausted and the country will start running out of cash.

Quick passage in the Senate is far from assured, particularly a deal well-short of the demands to gut Obamacare sought by conservatives like Sens. Ted Cruz (R-Texas) and Mike Lee (R-Utah). The two senators who led the movement to defund Obamacare as part of a government spending bill did not attend a Republican Conference policy lunch Tuesday and have refused to divulge their plans.

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