Senate leaders said late Monday that they were closing in on a deal to raise the federal debt limit and end the two-week-old government shutdown, just days before the Treasury Department exhausts its ability to borrow.
The emerging agreement would extend the Treasury Department’s borrowing authority until Feb. 7, reopen the government and fund federal agencies through mid-January, according to aides and lawmakers familiar with the negotiations.
In the meantime, policymakers would launch a new round of talks over broader budget issues in hopes of developing a plan to replace deep automatic spending cuts known as the sequester before Jan. 15. That is when the next round of sequester cuts is scheduled to slice another $20 billion out of agency budgets, primarily from the Pentagon.
The framework under consideration includes only minor changes to President Obama’s signature health-care law, falling well short of defunding it or delaying major provisions as conservative Republicans initially sought. Instead, Republicans would get only new safeguards to ensure that people who receive federal subsidies to purchase health insurance under the law are eligible to receive them.
But talks were hung up over another provision, aides and lawmakers said: a demand by Democrats to delay the law’s “belly button tax,” a levy on existing policies that is set to add $63 per covered person — including spouses and dependents — to the cost of health insurance next year. Republicans derided the proposal as a special favor to organized labor.
Meanwhile, Democrats were resisting a GOP demand to deny Treasury Secretary Jack Lew the use of special measures to extend his borrowing power past Feb. 7. That would give Congress a firm deadline for the next debt-limit increase, with no wiggle room for Treasury Department accountants.
Despite those points of contention, Senate Majority Leader Harry M. Reid (D-Nev.) and Minority Leader Mitch McConnell (R-Ky.) appeared confident that they had developed a framework that could win the approval of Congress and spare the country from a first-ever default on the national debt.
“We’ve had a good day,” McConnell said in a speech closing the Senate for the evening. “I think it’s safe to say we’ve made substantial progress and we look forward to making more progress in the future.”
Reid agreed. “We’ve made tremendous progress. We are not there yet, but tremendous progress. And everyone just needs to be patient,” he said. “Perhaps tomorrow will be a bright day.”
The big question mark Monday evening was whether the emerging agreement could win the approval of the Republican-controlled House, where a small bloc of conservatives has managed to direct GOP strategy.
While McConnell and Reid were at work on a bipartisan compromise, House Budget Committee Chairman Paul Ryan (R-Wis.) was continuing to promote a more partisan bill that would lift the debt limit for only six weeks.
House Speaker John A. Boehner (R-Ohio) met midafternoon with McConnell and then huddled with his own leadership team. Afterward, Majority Whip Kevin McCarthy (R-Calif.) declined to say what path the House would take.