US Senate Majority Leader Harry Reid returns to the Senate
floor after Republicans failed to reach internal consensus
on how to break an impasse on the federal budget.
Negotiations in Congress to end the fiscal impasse
sputtered today, leaving both chambers grasping for a way to
reopen the government and raise the country's borrowing
authority with a Thursday deadline drawing near.
The Senate halted discussions on its own plan, as it waited
for the fractious Republican-controlled House of
Representatives to come up with an alternative proposal ahead
of the October 17 deadline, when the US Treasury says the
government will reach its borrowing limit.
Senate leaders had been close to a deal that would reopen the
government and raise the debt limit until early 2014, while
the initial alternative plan proposed by House Republican
leaders failed to gain enough support in a closed-door
meeting for the House to proceed.
"There are a lot of opinions about what direction to go.
There have been no decisions about exactly what we will do,"
House Speaker John Boehner told reporters after the meeting.
"We're going to continue to work with our members on both
sides of the aisle to try to make sure that there is no issue
of default, and to get our government reopened," he said.
The disarray among House Republicans raised questions about
what the House will be able to pass. Conservative House
members, driven by support from Tea Party small-government
activists, have demanded changes to Obama's signature
healthcare law as part of any budget deal.
Those demands sparked the shutdown that began with the dawn
of the new fiscal year on Oct. 1, temporarily throwing
hundreds of thousands of government employees out of work.
If Congress fails to reach a deal by Thursday, checks would
likely go out on time for a short while for everyone from
bondholders to workers who are owed unemployment benefits.
But analysts warn that a default on government obligations
could quickly follow, potentially causing the U.S. financial
sector to freeze up and threatening the global economy.
Senate Democratic Leader Harry Reid and Republican Leader
Mitch McConnell halted talks while House Republicans tried to
sort out what they would support, Richard Durbin of Illinois,
the No. 2 Senate Democrat, told reporters.
"We were on track and Boehner stepped in," he said.
"McConnell is waiting on Boehner and Boehner is waiting on
After Durbin's comments, markets got increasingly nervous
about the prospects of a last-minute deal.
The Dow Jones Industrial Average was down 0.55 percent in
late afternoon trade. The Standard & Poor's 500 Index was
trading down 0.4 percent.
The House Republican proposal initially floated on Tuesday
would have funded the government through Jan. 15, and raised
the $16.7 trillion debt ceiling by enough to cover the
nation's borrowing needs through Feb. 7, similar to the
Senate plan, aides said.
But unlike the Senate, it would include a two-year suspension
of the medical device tax included in Obama's healthcare law,
and a requirement that members of Congress and the
administration be covered under the law.
The House version also would not allow the U.S. Treasury to
renew its extraordinary cash management measures to stretch
borrowing capacity for months, which had tentatively been
allowed under the Senate plan.
The White House and Senate Democrats quickly rejected the
House draft plan as not workable.
Reid said the Republican plan was "partisan attempt to
appease a small group of Tea Party Republicans who forced the
government to shut down in the first place."
"I am very disappointed with John Boehner who once again
tried to preserve his role at the expense of the country,"
But Republican Senator John McCain of Arizona, who has blamed
House Republicans for the shutdown, blasted the White House
and Senate Democrats for promptly rejecting Boehner's latest
"I urge my Democratic colleagues, let's sit down and work
this out," McCain declared, his voice rising. "Let's get this
"To categorically reject what the House of Representatives
and the speaker are doing - and I think he is pretty
courageous in what he's doing - in my view is not serving the
American people," McCain said.
Obama was due to meet with House Democratic leaders at 3:15
p.m. (1915 GMT) to discuss their options.
Before the House action, Reid had said he was optimistic
about reaching a final deal this week.
"There are productive negotiations going on with the
Republican leader. I'm confident that we'll be able to reach
a comprehensive agreement this week in time to avert a
catastrophic default on the nation's bills," Reid said on the
Ratings firms have not yet revealed any plans to downgrade
U.S. government debt.