Beat the clock: Reid cites ‘tremendous progress’ in debt ceiling talks

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WASHINGTON (CNN) — Will Tuesday be Senate Majority Leader Harry Reid’s “bright day”?

Reid said Monday night that talks with his Republican counterpart, Minority Leader Mitch McConnell, had made “tremendous progress” toward an agreement to end the partial government shutdown and raise the nation’s self-imposed borrowing limit, raising hopes among investors, world leaders and regular Americans that the shutdown stalemate was nearing an end.

“Perhaps tomorrow will be a bright day,” he said.

U.S. stock futures — often seen as an indicator of how markets will open — were up only slightly early Tuesday as investors largely waited out the politicians.

And the White House canceled a planned meeting with congressional leaders, likely a move to give Reid and McConnell room to negotiate.

But questions remained about what would happen to any Senate deal once it reaches the House of Representatives, which has repeatedly sent back shutdown-related bills passed by the Senate’s Democratic majority.

Mindful that the deadline to raise the amount the government allows itself to borrow is days away, House Republican leaders are considering all their options, said a GOP leadership aide, speaking on the condition of anonymity.

The negotiations are also being closely watched by other nations, which would also feel the impact should the United States run out of money to pay some of its bills.

Jon Cunliffe, who will become the deputy governor of the Bank of England, told British lawmakers over the weekend that banks should begin planning for contingencies.

The ongoing shutdown — now in its 15th day — has proven costly. Hundreds of thousands of federal employees are either idling at home or not being paid for their work during the shutdown. Government offices, many parks and other facilities are closed. And officials warn tough choices are ahead about which bills to pay and which to let slide, should the shutdown and debt-ceiling debate drag on.

So far, the standoff has cost the economy about $20 billion in gross domestic product, CNN’s Christine Romans reported Tuesday on “New Day,” citing Mark Zandi of Moody’s Analytics. GDP is a measure of the goods and services produced by an economy.

During a visit Monday to a local food pantry, President Barack Obama warned of what he called continued partisan brinkmanship by House Republicans who “continue to think that somehow they can extract concessions by keeping the government shut down or by threatening default.”

“My hope is a spirit of cooperation will move us forward over the next few hours,” Obama said.

The finer points

Reid and McConnell have to reach a resolution on two critical issues: End the partial government shutdown that began October 1, and raise the debt ceiling so the U.S. can borrow more money to pay all the government’s bills.

Democrats want an increase in the debt ceiling to last for several months, to avoid similar showdowns in coming months.

At the same time, they want a spending plan to reopen the government, but one that will be temporary. This will allow them to work toward a longer-term agreement that can negate the impacts of the forced sequestration cuts.

Republicans want the opposite.

They want a longer spending proposal that would lock in the planned sequestration cuts in coming months. And they want a shorter debt ceiling extension in order to negotiate further deficit-reduction measures.

“We’ll get this done. We’re going to get this done. I feel real confident,” said Sen. Joe Manchin, D-West Virginia.

‘Solve this problem today’

During his visit to Martha’s Table in Washington, Obama said the congressional leaders could “solve this problem today.”

He warned that a default — in which the government would lack enough cash on hand to pay down its debt obligations as well as other daily bills such as Social Security checks — “could have a potentially devastating effect on our economy.”

“We’ve already had a damaging effect on our economy because of the shutdown,” he said. “That damage would be greatly magnified if we don’t make sure that government’s paying its bills, and that has to be decided this week.”

The Treasury Department has said it will be unable to pay the government’s bills unless the debt limit is increased by Thursday.

Details fluid

Democratic sources told CNN that the proposal under consideration by Reid and McConnell would fund the government through January 15, allowing it to reopen for at least three months or so.

At the same time, negotiations on a budget for the full fiscal year would have a deadline of some time in December, the sources said.

Meanwhile, the debt ceiling would be increased through February 7 to put off the threat of default for almost four months, according to sources in both parties.

The budget negotiations were expected to address deficit reduction measures and therefore could impact when the debt limit would need to be increased again.

In addition, provisions involving Obama’s signature health care reforms could be included, such as strengthening verification measures for people seeking federal subsidies to help them purchase health insurance required by the 2010 Affordable Care Act, the sources said.

Another possible change to the health care reforms would delay a fee on employers, unions and other plan sponsors that raise money to compensate insurance companies for taking on high-risk customers in the early years of Obamacare.

CNN political analyst John Avlon said Monday that Democrats wanted to press what they perceive as an advantage over Republicans on how the public is perceiving the latest round of Washington budget and deficit brinkmanship.

“What’s behind it (are) poll numbers that saw Republicans getting their butt kicked because of this whole gamesmanship,” Avlon said.

CNN’s Dana Ford, Greg Clary, Deirdre Walsh, Mark Preston, Chelsea J. Carter, Dan Merica, Brianna Keilar and Janet DiGiacomo contributed to this report.

By Tom Cohen and Matt Smith
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