Senate reaches deal to end government shutdown, raise debt limit

The U.S. Capitol looms in the background of a sign on the National Mall reminding visitors of the closures to all national parks due to the federal government shutdown in Washington October 3, 2013.
The U.S. Capitol looms in the background of a sign on the National Mall reminding visitors of the closures to all national parks due to the federal government shutdown in Washington on Oct. 3.
Credit: Reuters

The U.S. Senate announced a last-minute deal on Wednesday to avert a historic lapse in the government’s borrowing ability and a potentially damaging debt default, and to reopen the government after a two-week shutdown.

But even if the Senate and House of Representatives manage to overcome procedural hurdles to seal the deal before Thursday — when the Treasury says it will exhaust its borrowing authority — it will only be a temporary solution that sets up the prospect of another showdown early next year.

Major U.S. stock indexes rose more than 1 percent on optimism that lawmakers were finally reaching a deal to end the weeks-long fiscal impasse.

Senate Majority Leader Harry Reid and Republican leader Mitch McConnell announced the agreement on the Senate floor, where it was expected to win swift approval after a main Republican critic of the deal, Sen. Ted Cruz of Texas, said he would not use procedural moves to delay a vote.

Weeks of bitter fighting among Democrats and Republicans over President Barack Obama’s signature health care reform law led to a partial government shutdown on Oct. 1, sidelining hundreds of thousands of federal workers. Cruz and other Republicans backed by the conservative, small government Tea Party movement want to repeal or delay the healthcare law.

The initial fight over the healthcare law turned into a bigger argument over the debt ceiling, threatening a default that would have reverberations around the world.

Both Democrats and Republicans are confident that the U.S. House of Representatives will have enough votes on Wednesday to pass the bipartisan Senate plan, a top Democratic aide said.

Aides to House Speaker John Boehner, the top Republican in Congress, called senior Senate staff to say the House would vote first on the measure, the aide said. The aide said it appears certain to be approved with mostly Democratic votes.

Boehner has been under fierce pressure from conservative members of the House not to call a vote relying on Democratic support, and his job may be on the line if they continue their opposition to the Senate deal.

Lawmakers are racing against time. While analysts and U.S. officials say the government will still have roughly $30 billion in cash to pay many obligations for at least a few days after October 17, the financial sector may begin to seize up if the deal is not finalized in both chambers.

“Today is definitely not the day to be conducting any serious business as traders across the globe will be hypnotized by their TVs/terminals and anxiously waiting for something to hit the news wires,” Jonathan Sudaria, a trader at Capital Spreads in London, wrote in a client note.

Fitch Ratings has said it could cut the U.S. sovereign credit rating from AAA, citing the political brinkmanship over raising the debt ceiling.

The deal that emerged on Wednesday would basically give Obama what he has demanded for months: A straight-forward debt limit hike and government funding bill.

The deal would extend U.S. borrowing authority until February 7, although the Treasury Department would have tools to temporarily extend its borrowing capacity beyond that date if Congress failed to act early next year. It would also fund government agencies until January 15.

The budget deadlock led to federal agency shutdowns at the beginning of the fiscal year on October 1 as Obama and his fellow Democrats stood firm against changing the healthcare law.

Uncertainty over the shutdown and the debt ceiling have already taken a toll on the economy and on confidence in U.S. assets.

Richard Fisher, the hawkish president of the Federal Reserve Bank of Dallas, told Reuters on Tuesday that “reckless” U.S. fiscal policy will likely force the Federal Reserve to stand pat on monetary policy this month rather than reducing bond purchases the central bank has used to help support the economy.


News
Entertainment
Sports
Lifestyle
Local

Bomb squad detonates backpacks left at Marathon finish…

The Boston Marathon finish line has been evacuated and the Copley Square T station has been closed as police investigate a suspicious package, WBZ is reporting.

National

Reddit boosts news capabilities in social media turf…

By Jennifer SabaNEW YORK (Reuters) - Reddit, a website with a retro-'90s look and space-alien mascot that tracks everything from online news to celebrity Q&As,…

National

Missouri man charged with sexually torturing five women

A Missouri man has been charged with raping and torturing five women in a St. Louis-area apartment over several years, law enforcement officials said on Tuesday.

Money

Second Shift: How a fashion designer makes ends…

TABii Just designer Tabitha St. Bernard tells Metro how a fashion designer makes a living in New york City.

Television

'Orphan Black's' Jordan Gavaris talks Felix's Season 2…

Jordan Gavaris plays heroically helpful foster sibling Felix to main clone Sarah on "Orphan Black." We talked to him about what’s ahead for him in…

Television

TV watch list, Tuesday, April 15: 'New Girl,'…

'New Girl' Nick and Jess are hiding their breakup from the other loft residents. And Winston passes the police academy exam! That guy needed some…

Television

'Orphan Black' is back with 'crazy clone shenanigans'

“Orphan Black” is the little show that could. It had a few things working against it: a sci-fi premise, attracting an audience who had never…

The Word

Kelly Osbourne and Paris Hilton fight over a…

Paris Hilton and Kelly Osbourne, both members of famous families and natives of the reality boom of the early aughts, should be great friends. And yet.

MLB

MLB video highlights: White Sox beat Red Sox…

Red Sox fall on walk-off error to White Sox

NBA

NBA Draft Lottery day is May 20: Celtics…

NBA Draft Lottery day is Tuesday, May 20: Celtics percentage odds for a top overall pick

MLB

Opinion: Major League Baseball replay system shouldn't be…

Opinion: Major League Baseball replay system shouldn't be dumped just yet

NHL

Bruins - Red Wings preview: David Krejci ready…

Bruins - Red Wings preview: David Krejci ready to erupt once again in playoffs

Home

Steal home decorating tips from Nattystyle blogger Natalie…

Despite the towering ceilings and enviable exposed brick, it’s easy to see how Natalie Decleve’s apartment could be considered a challenge. Perched above the streets…

Home

How to plant a garden in the city

Small on space but big on gardening? You can still have that welcoming oasis of fresh air with an urban garden. Peter Smith, owner of…

Style

Victoria's Secret Fashion Show moving to England

It will still broadcast on CBS this fall.

Tech

Google Glass finally goes on sale for regular…

The Google Glass finally went on sale for regular people. It only costs $1,500.

Comments

1

  1. Now is the time to take out everyone of our politicians responsible for the shutdown out of office. If we don’t want another shutdown happening again then we need to stop this childish behavior now! The shutdown cost the taxpayers over 4billion dollars which could have gone to something like our schools or roads. We need a government that works and haven’t had one for a long time and that’s because the same people are still holding their seats in the senate and congress. Its time to find these rotten apples and throw them out before they spoil the rest of the apples. America, lets get to work and throw out these rotten apples to make way for the new ones.