Time is running out.
All eyes are on Senate Majority Leader Harry Reid (D-Nev.) and Minority Leader Mitch McConnell (R-Ky.) as they hold last-minute talks to prevent the U.S. government from defaulting on its $ 16.7 trillion debt and potentially plunging the country back into a recession.
Any bipartisan agreement needs to come together very soon – either Monday or Tuesday – or else the nation runs a serious risk of running out of the ability to borrow money. In 2011, a last-minute deal to lift the debt limit resulted in a credit downgrade of U.S. debt.
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After a weekend legislative session in the Senate and House, talks appear to be at a standstill, largely because of disagreements over future spending levels. That’s leading to a sharp downtick in the U.S. market. The Dow Jones Industrial Average opened down nearly 100 points. Overseas markets were down slightly overnight, but the chorus of calls from foreign governments for U.S. leaders to end their fiscal infighting is getting louder by the day.
That the federal government is closed for the 14th straight day is getting lost in this debate, as hundreds of thousands of federal workers remained furloughed until Congress and the White House can reach a deal to end the partisan stalemate.
On Sunday, Reid said he and McConnell had a “productive” discussion, but no deal was reached. Some Senate Democrats are pushing to end the sequester spending levels enacted under the 2011 Budget Control Act, a non-starter for McConnell and House Republicans.
McConnell is also aiming to change President Barack Obama’s signature health care law, but Republican efforts to repeal or defund Obamacare have largely ended.
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On another track, House Republican leadership is readying itself to lift the debt ceiling for six weeks. House GOP aides stress that no decisions have been made, but this legislation is unlikely to be “clean” – meaning it will contain a number of conservative policies attached. Options under consideration include language to cancel health insurance subsidies for members of Congress, their aides and the White House, and an amendment to tighten requirements for health-insurance related subsidies.
House Republicans are expected to meet Tuesday morning to discuss their options. A topsy-turvy day in financial markets could create some pressure to act. The Senate will hold a vote on judicial nominations Monday afternoon, in order to have all senators in one place at one time.
If something comes out of the Senate, Speaker John Boehner (R-Ohio) will be in a difficult spot. The House and Senate have been miles apart all year, and Boehner will likely have to put something on the floor that will pass with minimal Republican support.
Boehner has a few options. He could pass his own bill, which would face an uncertain future in the Senate. He could pass a Senate deal, if it comes together — a legislative defeat for House Republicans. Or he could change what comes up in the Senate, and send it back — that scenario seems most likely, since House Republicans will want their imprimatur on whatever becomes law.
Pressure is on Reid, McConnell to make a deal
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