Senate leaders strike deal to end shutdown, raise debt ceiling

Greg Nash

Senate leaders on Wednesday announced an agreement to reopen the government and raise the debt ceiling — and lawmakers expressed optimism the deal was headed for quick passage in both chambers.

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Senate Republican Leader Mitch McConnell (Ky.) presented the deal to his conference Wednesday morning. Republican senators quickly rallied around the proposal, which would fund government through Jan. 15.

McConnell and Senate Majority Leader Harry Reid (D-Nev.) put the finishing touches on the proposal after an effort by House Republicans to advance a competing resolution collapsed Tuesday.

The bipartisan agreement would also raise the $16.7 trillion debt ceiling until Feb. 7, setting the stage for budget talks between the Senate and House.

Reid and McConnell announced the deal on the Senate floor shortly after noon.

"Our country came to the brink of disaster, but in the end political adversaries set aside ... their differences," Reid said. The agreement, he added, will "provide our economy the stability it desperately needs."

"What we’ve done is sent a message to Americans … that the United States lives up to its obligations."

McConnell said it's been "a long, challenging few weeks" and vowed that Republicans would continue to fight to repeal and replace ObamaCare — a demand that triggered the government shutdown on Oct. 1 — just not today.

"Republicans remain determined to repeal this terrible law," McConnell said.

If the legislation passes as expected, congressional leaders will also set up a Senate-House conference to negotiate fiscal reforms, which must be reported to Congress by Dec. 13, according to a senior Democratic aide.

The conference committee would be set up by unanimous consent when the chambers vote on the deal, the aide said.

The measure will allow the Treasury Department to continue its use of "extraordinary measures" to continue paying the government's bills once it reaches the debt limit. The department informed Congress in May that it had begun to use such measures to manage the debt ceiling.

This policy win for Democrats could push the next fight over the debt limit into March or beyond.

Senate leaders told local lawmakers that the deal would also include a provision granting back pay to 800,000 furloughed federal workers, according to Sen. Ben Cardin (D-Md.) and a Senate aide.

Lawmakers are racing against the clock to meet Thursday’s debt-ceiling deadline, when the Treasury has said the nation's borrowing authority will be exhausted.

The credit rater Fitch on Tuesday said it was putting the U.S. credit rating on watch for a possible downgrade, creating a sense of urgency for getting legislation to President Obama’s desk.

The stock market surged Wednesday as signs emerged that Washington would find a way to avoid the nation’s first-ever debt default. The Dow Jones industrials average rose almost 200 points in morning trading.

It remains to be seen whether Speaker John Boehner (R-Ohio) will have significant Republican support for the Senate deal or be forced to rely on House Democrats to pass it.

The Reid-McConnell agreement leaves ObamaCare largely intact, to the dismay of Senate and House conservatives.

It would set up procedures to verify the income of people who apply for subsidies through federal healthcare exchanges to guard against fraud.

But it would not repeal or delay the law’s medical device tax, which many Republicans and some Democrats support.

Democratic aides characterized income verification as a minor reform because it would merely shape the enforcement of existing law instead of change the structure of the Affordable Care Act.

Conservatives panned the deal for leaving ObamaCare in place.

“Unfortunately, once again the Washington establishment has cut a deal that leaves the American people behind. This deal does nothing to provide relief to the millions of people who are hurting because of ObamaCare,” said Sen. Ted Cruz (R-Texas), who led the effort to block a government stopgap unless the law was defunded.

"We left a lot on the table because we couldn't get our act together but this is the best Mitch could do," said Sen. Lindsey Graham (R-S.C.). "We need to stop the bleeding, lessen the damage to the party."

Senate aides initially said Wednesday morning the House might take up the bipartisan deal and pass it first. That would allow Senate leaders to reduce the procedural time necessary to approve it in the upper chamber if conservative critics, such as Cruz raise objections.

But Cruz and his ally, Sen. Mike Lee (R-Utah), said they will not try to block the deal from passing.

“The timing of the vote will make no difference to the outcome," Cruz said. "I have no intention of delaying the vote."

A Senate Democratic leadership aide announced Wednesday afternoon the Senate will likely act first on the deal. The upper chamber is expected to vote in the later afternoon or early evening, said the source.

House Republicans are set to meet at 3 p.m. this afternoon, according to several GOP lawmakers.

"The Speaker will bring that bill to the House floor," Rep. Kevin Brady (R-Texas) told Bloomberg television Wednesday morning.

Sen. John McCain (R-Ariz.) said he knew the government shutdown would end without conservative Republicans winning in their demand to delay ObamaCare's implementation.

“One, we weren’t going to defund ObamaCare, and two, we weren’t going to shut down the government [for an extended period],” McCain said. “We’re not going to keep the government shut down. People don’t like government but they sure don’t want it shut down.”

He added: "I hope it is another 15 years at least before we have to go through this exercise again. [Republicans] are in a hole, we have to dig out and come up with a positive agenda."

Sen. Orrin Hatch (R-Utah) sharply criticized House conservatives for refusing to support Boehner's efforts to end the shutdown.

"I just bitterly resent some of the things that have been done," Hatch said.

Erik Wasson, Ramsey Cox and Mario Trujillo contributed to this report, which was last updated at 2:48 p.m.