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Reid, McConnell optimistic on debt-shutdown deal

By Donna Cassata

Associated Press

LAST UPDATED: 08:50 a.m. HST, Oct 14, 2013

WASHINGTON » The Senate's top two leaders both expressed optimism today that they were closing in on an agreement to prevent a national financial default and reopen the government after a two-week partial shutdown.

After meeting twice today 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."

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 these cuts fell on both domestic programs and defense, 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.

These officials spoke on condition of anonymity, saying they were not authorized to discuss private matters.

While Reid, D-Nev., said there was not yet an accord, he said he hoped to have a proposal to outline when the two men and House leaders meet with Obama at mid-afternoon. Emerging from Reid's office, Sen. Amy Klobuchar, D-Minn., said "he told us the negotiations were productive and positive."

No details were available on the terms under discussion.

Visiting a Washington charity, Obama mentioned the possible progress in the Senate and said his mid-afternoon meeting will determine whether it's real.

"My hope is that a spirit of cooperation will move us forward over the next few hours," the president told reporters.

Otherwise, he warned that 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.

In announcing the meeting with Obama, the White House said the president would repeat a vow he has made consistently in recent weeks: "we will not pay a ransom for Congress reopening the government and raising the debt limit."

The two Senate leaders, Reid and McConnell, had spoken by phone Sunday but failed to agree on a deal to raise the nation's borrowing authority above the $16.7 trillion debt limit or reopen the government. Congress is racing the clock with Treasury Secretary Jack Lew warning that the U.S. will quickly exhaust its ability to pay the bills on Thursday.

Separately, a bipartisan group led by Sen. Susan Collins, R-Maine, met for two hours this morning on a possible solution to the impasse.

"We're making very good progress, but there's still many details to be worked out," Collins said before joining her GOP colleagues at a meeting with McConnell. "We don't have a finished, agreed-upon product yet but I think we had an excellent meeting. And we'll get together later today."

There was no certainty that the growing anxiety among financial leaders around the world would provide the necessary jolt to Senate leaders, who represent the last, best chance for a resolution after talks between President Barack Obama and House Republican leaders collapsed.

Sen. Joe Manchin, D-W.Va., said today that investors are growing increasingly "skittish" about the possibility of default. The bond markets were closed for Columbus Day, and by mid-morning the stock market was down modestly, with both the Dow Jones industrial average and Standard & Poor's 500 index losing less than 1 percent. Trading in Asia was muted, with markets in Tokyo and Hong Kong closed for holidays.

The shutdown has furloughed 350,000 federal workers, impeded various government services, put continued operations of the federal courts in doubt and stopped the IRS from processing tax refunds. Some parks and monuments remain closed, drawing a protest at the National World War II Memorial on Sunday that included tea party-backed lawmakers who had unsuccessfully demanded defunding of Obama's 3-year-old health care law in exchange for keeping the government open.

Economists see greater financial danger from an historical default. Christine Lagarde, the International Monetary Fund's managing director, spoke fearfully about the disruption and uncertainty, warning on Sunday of a "risk of tipping, yet again, into recession" after the fitful recovery from 2008.

Reid and McConnell — five-term senators hardened by budget disputes and years of negotiations — are at an impasse over the automatic, across-the-board spending cuts known as sequestration and whether to undo or change them as part of a budget deal. Republicans want to keep the spending at the deficit-cutting level of the 2011 budget law while Democrats are pressing for a higher amount.

"I'm optimistic about the prospects for a positive conclusion to the issues before this country today," Reid said as the Senate wrapped up a rare Sunday session.

McConnell insisted a solution was readily available as he embraced the proposal from a bipartisan group of 12 senators, led by Collins and Manchin, that would re-open the government and fund it at current levels for six months while raising the debt limit through Jan. 31.

It also would give agencies greater flexibility in dealing with the automatic budget cuts, delay the medical device tax for two years and establish income verification for individuals receiving subsidies to buy health insurance.

"It's time for Democrat leaders to take 'yes' for an answer," McConnell said in a statement.

"This haven't put us on suicide watch yet," Manchin joked this morning, "but they're concerned about us."

He said, "The leaders have to come together" and decide what time frame a stopgap spending bill would cover and how much it would cost.

Tennessee's Sen. Bob Corker, a Republican, said the leaders of both parties need to be "getting on the same page."

McConnell and Republicans want to continue current spending at $986.7 billion and leave untouched the new round of cuts on Jan. 15 that would reduce the amount to $967 billion. Democrats want to figure out a way to undo the reductions, plus a long-term extension of the debt limit increase and a short-term spending bill to reopen the government.

"Republicans want to do it with entitlement cuts," said Sen. Chuck Schumer, D-N.Y. "Democrats want to do it with a mix of mandatory cuts, some entitlements and revenues. And so how do you overcome that dilemma? We're not going to overcome it in the next day or two."

He suggested keeping the government running through mid-January.

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frontman wrote:
If the US defaults you can blame no on but, omama and ALL democrats.
on October 14,2013 | 06:32AM
palani wrote:
Calling it a default is irresponsible and misleading. Tax receipts will not suddenly stop flowing into the nations' coffers. There will more than enough revenues to satisfy all outstanding debt service, as well as social security, medicare, and full government payrolls. The media is complicit in inciting a contrived panic.
on October 14,2013 | 07:57AM
CriticalReader wrote:
Yeah, and if you cut out all federal expenditures on Tea Party favored programs in Tea Party represented districts, no problem.
on October 14,2013 | 09:21AM
So easy to blame. Unfortunately, you like many people want to put the blame solely on one or a group of the same. If you gave a true assessment and not a biased assessment, you may want to entertain the idea that it is OUR COUNTRY'S fault. We as Americans need to stop this party blaming. In fact, why we have Dems or Reps is beyond me. I think somebody should start of a AMERICAN PARTY to which we ALL belong, and we vote for ideas and beliefs, not parties. Parties should be left for the party-goers. LOL
on October 14,2013 | 11:07AM
HD36 wrote:
What we really have to worry about is not the debt ceiling but the lending ceiling. That's where nobody is going to lend you anymore money. Like a dead beat uncle, the time comes where foreignors say no mo money fo you.
on October 14,2013 | 07:07PM
hybrid1 wrote:
FACT: Only the congress is responsible for authorizing and paying the bills. The President has legal no authority to stop the shutdown or raising the debt limit. . Get your facts straight before you bash Obama.
on October 14,2013 | 02:12PM
kolohepalu wrote:
Mmhmm. And Repubs are polling the lowest approval numbers ever recorded. But it's President Obama's fault because he was born in Kenya and is a Muslim and a communist, right? The red states need you- please move.
on October 14,2013 | 09:35PM
lokela wrote:
The only thing that's progressing is more hot air.
on October 14,2013 | 06:33AM
HLOEWEN wrote:
This comment has been deleted.
on October 14,2013 | 06:48AM
IAmSane wrote:
Yeah, you don't sound like a crazy person at all.
on October 14,2013 | 07:01AM
seaborn wrote:
Aesop's Fables is more enlightening.
on October 14,2013 | 09:00AM
kolohepalu wrote:
Probably just as factual, also.
on October 14,2013 | 09:36PM
lee1957 wrote:
Good luck with that one.
on October 14,2013 | 09:03AM
HD36 wrote:
All religions point to this period in time where great natural disasters happen. Our solar system goes through 26,500 year cycles. Whenever it goes through the galactic plane, the gravitational force of the black hole affects the earth's magnetic feilds and the sun's magnetic feild. Events that are too complicated and yet to be scientifically explained occur with regularity as documented in every religion.
on October 14,2013 | 07:12PM
BillD wrote:
Tea Party terrorists holding America hostage again. We get it, you don't like Obama, get over it.
on October 14,2013 | 06:54AM
retire wrote:
Tea party terrorists? Please, a real terrorist is what we need to get these politicians to work together, It's all their faults, or, our fault for constantly re-electing the same people and expecting a different result. Get rid of the career politicians!
on October 14,2013 | 09:47AM
hybrid1 wrote:
FACT: Only the congress is responsible for authorizing and paying the bills. The President has legal no authority to stop the shutdown or raising the debt limit.
on October 14,2013 | 01:41PM
HD36 wrote:
So if we raise the debt ceiling again, for the 50th straight time, are the debts going to go away or get bigger?
on October 14,2013 | 07:13PM
soundofreason wrote:
"Default looms on day 14 of shutdown, no solution in sight" >>> Silly writer. The shutdown IS the solution.
on October 14,2013 | 06:56AM
frontman wrote:
YES..........Lets shut down until spending is under control.
on October 14,2013 | 09:06AM
HD36 wrote:
Your'e exactly right. Raising the debt ceiling is actually bullish for gold.
on October 14,2013 | 07:15PM
loquaciousone wrote:
Sarah Palin has emerged as a Republican candidate. How far the mighty has fallen.
on October 14,2013 | 07:04AM
lee1957 wrote:
What is she running for?
on October 14,2013 | 09:04AM
localguy wrote:
Can you believe the pure gall of these clueless bureaucrats? When one was interviewed on the news, asked about all the millions of Americans their willful failure is hurting, losing thousands to tens of thousands of dollars, on and on, his reply was, "This is just part of the process." Really? Because you are dysfunctional the average American has to lose money, suffer for no reason, watch the country get dragged into the gutter? These fools just don't get it. See nothing wrong with failing to do their job, think they are "The chosen ones." Need to change the laws to take their toys away. Automatic CR kicks in when no budget approved. Automatic borrowing limit increase. And pay penalties. No pay raise for any FY budget not done on time. Show them their are penalties to be paid for failing to do your job.
on October 14,2013 | 07:15AM
HD36 wrote:
The US is the largest debtor nation in the history of the world. The founders of the Constitution mandated that our currency be gold and silver. Stuff that can be printed out of nothing. This would constrain government growth to the gold and silver they had. They could never go in debt. Look how far we've come. Now we have a private central bank buying $85 billion a month. The las 5 years we've had quantitative easing in the form of debt moneization. It's not a matter of if this bubble collapses but when. In fact many believe it already collapsed and the Fed and major banks are holding up the bond market through interest rate swaps and flash trading. However, once a bubble bursts, it can't be reblown. An alternative dollar trading platform will be the death blow to the dollar. Like the bilateral trade agreemnt just signed between China and Europe.
on October 14,2013 | 07:37AM
CriticalReader wrote:
The Dems have to play hardball, and the moderate GOP guys have to get off the fear and ideology train and get pragmatic. The Tea Partiers have to be isolated economically. A Coalition of Dems and moderates should put together a package pulling all federal apprpriations, discretionary spending, federal contract execution, and other discretionary federal attention from Tea Party districts. GOP moderates, now have the chance to REALLY benefit their districts, in ways that will garner votes far more effectively than the Kochs and their ilk ever could.
on October 14,2013 | 10:08AM
soundofreason wrote:
"The Tea Partiers have to be isolated economically">>> PLEASE!!! Give us Nebraska!
on October 14,2013 | 05:41PM
CriticalReader wrote:
I thought you guys wanted the Dakotas or Oklahomal? That's what I thought I heard Beck say after the 2012 elections.
on October 14,2013 | 08:26PM
kolohepalu wrote:
Take Texas- please.
on October 14,2013 | 10:10PM
HD36 wrote:
We're going to default one way or another. Either through a currency default or a direct default.
on October 14,2013 | 07:16PM
CriticalReader wrote:
What is a currency default? What is a direct default?
on October 14,2013 | 08:38PM
hawaiikone wrote:
Well put. Too bad we prefer to spend all our time pointing fingers at each other rather than trying to patch the bubble.
on October 14,2013 | 01:42PM
CriticalReader wrote:
Before you become too agreeable with me, understand what I am advocating, There have to be political and economic consequences for what the Tea Party is doing and has done, and those consequence have to be designed to send their supporters and enablers the message that it should not happen anymore. It must be an unequivocal message that it is neither funny, effective or advantageous to inflict or threaten economic harm and risk upon this Nation, Yes, this is contradictory to my general view that we must all care for one another and that our National policies should reflect that perspective. But, then again, sometimes you gotta take the cel phone and computer away from your kids to make a point.
on October 14,2013 | 02:03PM
soundofreason wrote:
"it is neither funny, effective or advantageous to inflict or threaten economic harm and risk upon this Nation," >>> Right. And recently doubling our debt problem is healthy? Go look up how Iceland dealt with this very same problem. Let me kick start ya.......

"Instead of allowing the criminals responsible for bank fraud to run free as the years passed by, Iceland thought it might be wise to actually indict bankers who committed serious financial crimes that contributed to the collapse. By paying off loans for consumers, forgiving homeowner debt (up to 110% of the property value), and throwing the offenders in prison, Iceland was able to bounce back. Now, its economy is “recovered” and is growing faster than both the US and European economies."

on October 14,2013 | 05:45PM
hawaiikone wrote:
My "well put" was in response to hd36's excellent description of our potential future. I'm certainly not a fan of the tea party's methodology, but am in agreement with some of their foudational statements.
on October 14,2013 | 06:20PM
CriticalReader wrote:
OK, sorry. But that's a relief. I got really kinda creeped out when I thought you agreed with me.
on October 14,2013 | 08:08PM
CriticalReader wrote:
Iceland doesn't have the very same problem(s). No Iraq/Aghanistan war debt, no Medicare part D, and, I'm not sure, but I THINK, no Bush type tax cuts. But what you see as the wonderful approach of Iceland, I would like to know how you fund. Paying off loans for consumers? Who would be doing that? The federal government? Out of what? Loan proceeds from China? Or, forgiving homowever debt (up to 100% of the property value?) OK, if that involved just prohibiting the banks from colleting on the mortgage debt, I guess that sounds good. Buuuuuuuut. . . isn't that exactly what happened when the system came within a hair of collapsing? The banks couldn't collect on the mortgage debt, and then the bottom fell out from under the mortgage backed securities, and then everyone wanted their money out of the biggest banks with the biggest mortgage backed securities exposure? But then the government bailed out the bigger banks? Which meant government money essentially going to cover mortgage debts? Which leads to more government debt, which you don't like?
on October 14,2013 | 08:06PM
Maipono wrote:
We live in ironic times, we have individual Americans that believe that we should live within our means, that we should not spend more than we have, and that we are spending way too much right now, and the president and his minions consider them "terrorists". The Tea Party Patriots don't ask for your money, they are both Republicans and Democrats, in fact they have no party affiliation, yet if your are a partisan hack, both Republican and Democrat, the Tea Party Patriots are the problem. Maybe the establishment is "terrified" of not having a job after the next election.
on October 14,2013 | 08:20AM
kolohepalu wrote:
Why is it that the majority of the wealth in this country is concentrated in the top 0.05% of income earners? And why is it that nearly all of these people are repubs, and/or Tea Baggers? Because, they know if they throw around bright, shiny terms like "fiscal conservatism" they will get the blue-collar majority of their party to pay for their tax-cuts. They wave their american flag, listen to their Toby Keith records, and watch NASCAR while the upper echelons of their party continues to skrue 'em without mercy or guilt.
on October 14,2013 | 09:53PM
Maipono wrote:
kolohepalu, you are reading too many liberal sites, Warren Buffet, one of the richest men in the world, the top .0001% of the world, supports Obama, and has made money during these hard times. Crony Capitalism is how he and others like him, like the Democrat Party hero, "the inventor of the internet", Al Gore has made billions as well. Many of the hard working Americans who believe that this is not right call themselves Tea Party Patriots. They believe that the marketplace is where regular people should make their fortune, not Crony Capitalism, like what Obama has employed with great success the last 5 years and managed to demonize regular citizens who want to persue the American Dream.
on October 15,2013 | 05:55AM
kolohepalu wrote:
Ah God, somebody's been watching too much Fox. We're not talking one or two individuals- we're talking an entire demographic- the repubs represent the interest of rich WASPs. While they legislate to protect their wealth, they serve up red meat to the their masses- moaning about immigrants and gays and muslims. It's sad how the blue-collar majority of the repubs allow their prejudices take priority over the economic realities.
on October 15,2013 | 06:33AM
alohabrina wrote:
Is Obama still coming here for his end of year Holiday? I bet he is and spending millions on flying back and forth on Air Force One.
on October 14,2013 | 08:24AM
seaborn wrote:
He's the President, let him enjoy his holiday.
on October 14,2013 | 09:02AM
bubbaButt wrote:
At the expense of ALL taxpayers and increasing the National Debt at the same time? What a fraud!
on October 15,2013 | 12:07AM
SteveToo wrote:
All Obama wants is a compromise by the Republicans. That means getting down on hands and knees and saying "yes master".
on October 14,2013 | 09:05AM
CriticalReader wrote:
Or the other way around, which sounds more familiar.
on October 14,2013 | 09:23AM
false wrote:
Freeing the slaves now seems like the biggest mistake the U.S. made. What do we have now, Obama, crimes by brothers. Some people just can't handle what is given them compared to other minorities. Truth hurts, no?
on October 14,2013 | 10:35AM
CriticalReader wrote:
Wow. What'd YOU do this weekend? Go to a Tea Party party?
on October 14,2013 | 11:25AM
CriticalReader wrote:
Actually, I'm just waiting for posters like pace and HD36 to come out and start backing up the recent overt Tea Party racist angle.
on October 14,2013 | 12:35PM
hawaiikone wrote:
If your comment is in any way related to this weekend's rally, you owe it to yourself to check it out thouroughly. It's truly sad what the media is feeding us.
on October 14,2013 | 06:12PM
CriticalReader wrote:
Nah, I think false's comment is prone to come from ANYONE who attends a Tea Party party on ANY weekend, or weekday for the matter.
on October 14,2013 | 07:53PM
CriticalReader wrote:
Eh, HK, I only say clips of Palin, Cruz and that clown Klansan (Klayman? Whatever) speaking. Did you see everything each one of them said at the rally?
on October 14,2013 | 08:24PM
hybrid1 wrote:
The biggest mistake made was by GWBush spending $1.4 Trillion on the reckless Iraq War, $1.2 Trillion on the Afghan War and reducing the tax rates for the rich which caused the U.S. to go into the great RECESSION and the middle class become poorer.
on October 14,2013 | 01:55PM
hawaiikone wrote:
Way over the line.
on October 14,2013 | 02:02PM
kolohepalu wrote:
Here's more painful truth: your demographic is shrinking and you are an endangered species. The U.S. is getting browner and gayer as we speak. You lose.
on October 14,2013 | 10:06PM
hybrid1 wrote:
The Republicans will NOT negotiate the tax rates or tax loopholes despite Obama and the Dems to date have reduced spending by $2.2 trillion while only getting $700 Billion in revenues. Get your facts straight before you bash Obama..
on October 14,2013 | 01:51PM
hybrid1 wrote:
The Republicans will NOT negotiate the tax rates or tax loopholes despite Obama and the Dems to date have reduced spending by $2.2 trillion while only getting $700 Billion in revenues. Get your facts straight before you bash Obama.
on October 14,2013 | 02:14PM
DAGR81 wrote:
Where is Barry?
on October 14,2013 | 09:36AM
CriticalReader wrote:
Here's a good one: Question: If Ted Cruz and John Boehner were both on a sinking ship, who would be saved? Answer: America.
on October 14,2013 | 10:44AM
CriticalReader wrote:
You wanna know why this shutdown happened and is still going on, and why there might be a debt ceiling default? Read this: http://www.huffingtonpost.com/2013/10/13/house-republicans-rules-change_n_4095129.html
on October 14,2013 | 09:58AM
Charliegrunt wrote:
Blaming each other is a stupid game that both parties are playing. Socialized medicine is not a new concept. It's in practice in a number of countries. Once again, the problem solving process was defective. No effort was made to study those currently in effect to see how they're working and how they could apply to us. No, Obama had to reinvent the wheel. Yes, the deficit has to be addressed because the bill will have to be paid. Unfortunately, neither party is looking at the real problems: Free Trade Agreements, and foreign and military aid to countries that are not really our friends or allies. No, they choose to break their contracts with their own people. Why furlough government workers, consider stopping military pay and benefits, stopping VA disability payments, and other CONTRACTS made with American citizens. Since the government is the one that BROKE THE CONTRACT, can our troops come home and leave the military? Can disabled veterans and furloughed government workers sue for breach of contract? Why is the President's and Congress' pay not been stopped? Why has the President's Secret Service protective services and travel not been stopped? These are things we definitely have to consider next election.
on October 14,2013 | 11:01AM
soundofreason wrote:
"Yes, the deficit has to be addressed because the bill will have to be paid.">>> Getting tired of them saying that only to continue their free fall spending only to come back with that tired phrase again and again. End the cycle.
on October 14,2013 | 05:51PM
hybrid1 wrote:
The Republicans will NOT negotiate the tax rates or tax loopholes despite Obama and the Dems to date have reduced spending by $2.2 trillion while only getting $700 Billion in revenues. Get your facts straight before you bash Obama..
on October 14,2013 | 01:52PM
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