Senate restarts talks to reopen government, prevent default

With time running out before a debt-ceiling deadline, spokesmen for Senate Majority Leader Harry Reid, D-Nev., and Senate Republican leader Mitch McConnell, R-Ky., said Tuesday evening that the leaders' talks were back on, after House Republicans scrapped a vote on their own bill to reopen the federal government and prevent a default on U.S. debt — which economists say could tip the global economy back into recession.

A spokesman for Reid said the two Senate leaders "are optimistic that an agreement is within reach" but offered no timetable. The Senate adjourned around 10 p.m. Tuesday, to recovene Wednesday.

After a spokesman for House Speaker John Boehner, R-Ohio, indicated early Tuesday evening that the body could take up the bill, the House Rules Committee subsequently voted to postpone, leaving the House bill in serious doubt. The House also adjourned Tuesday evening, to reconvene Wednesday.

Top House Republicans unveiled their plan earlier Tuesday, which sought far fewer concessions from President Barack Obama than they initially sought. It would also set up another battle with the administration early next year. The proposal sought to suspend a new tax on medical devices for two years and take away the federal government's contributions for lawmakers' and top White House officials' health care coverage in return for funding the government through Jan. 15 and giving Treasury the ability to borrow normally through Feb. 7.

Though the House Republican bill was opposed by tea party members of its own caucus, it also drew scorn from the Senate.

"It's nothing more than a blatant attack on bipartisanship," Reid said in a speech on the Senate floor. 

Meanwhile John McCain, R-Ariz, also blamed House Republicans, telling The New York Times that "Republicans have to understand we have lost this battle." He added that "we would not be able to win because we were demanding something that was not achievable."

After Congress failed to pass a bill to continue funding the government, a partial federal shutdown — now entering its third week — put hundreds of thousands of federal workers out of work. Lawmakers must approve a measure to increase the nation's borrowing limit by Thursday or risk that the United States will not be able to pay its bills on time. 

Meanwhile, Fitch Ratings placed the United States' AAA credit rating on negative watch Tuesday, saying that resolving the negative review "would necessarily reflect developments and events, including the duration of any agreement to raise the debt ceiling."

Both legislative measures — passing a budget and addressing the U.S.'s borrowing limit — are normally routine but have encountered intransigence among some in the Republican Party who are holding out against passing a clean bill on either matter. Instead they have called for conservative add-ons — such as a delay of Obama's health care reforms and commitments to severe spending cuts — before they vote any measure through.

Before the House vote was called off, Democratic leaders in the Senate had said they would vote against the House proposal, should it pass.

The White House released a statement calling the House GOP proposal "a partisan attempt to appease a small group of tea party Republicans who forced the government shutdown in the first place."

Boehner and House Majority Leader Eric Cantor spoke briefly Tuesday morning and said they wanted to see Congress avoid a default and reopen the government.

"I have made clear for months and months that the idea of default is wrong and we shouldn't get anywhere close to it," Boehner said. "We're talking with our members on both sides of the aisle to try to find a way to move forward today."

The plan under consideration by Reid and McConnell is far from the assault on Obama's signature health care law that tea party Republicans originally demanded as a condition for a short-term funding bill to keep the government fully operational. It also lacks the budget cuts demanded by Republicans in exchange for increasing the government's $16.7 trillion borrowing limit.

Instead it appeared likely to tighten income-verification requirements for individuals who qualify for federal subsidies under the health care law and may repeal a $63 fee that companies must pay for each person they cover beginning in 2014.

In addition to approving legislation to fund the government until late this year and avert a possible debt crisis later this week or month, the possible pact would set up broader budget negotiations between the Republican-controlled House and the Democratic-led Senate, with one goal being to ease automatic spending cuts that began in March and could deepen in January, when about $20 billion in further cuts are set to slam the Defense Department.

Any legislation backed by both Reid and McConnell can be expected to sail through the Senate, though any senator could delay it with a filibuster.

It's a different story in the Republican-controlled House, where conservative backing is proving hard to find. That means Boehner could be forced into the awkward and risky position of allowing a vote that would rely heavily on minority Democrats for passage.

Republican Rep. Joe Barton of Texas signaled that conservative members of the House were deeply skeptical. He said that the plan to end the crisis must have deep spending cuts to win his vote and that he thought Obama and Treasury Secretary Jacob Lew had more flexibility than they had said publicly.

"No deal is better than a bad deal," Barton said.

Meanwhile, furloughed workers were expected to take their frustration directly to Sen. Ted Cruz, R-Texas, on Tuesday. He arguably became the face of the shutdown after his 21-hour speech against the Affordable Care Act days before a congressional deadline to reach a deal. 

The American Federation of Government Employees was to hold a rally outside Cruz's district office in Dallas later in the day calling for an end to the shutdown.