WASHINGTON (AP) – Senate leaders announced last-minute agreement Wednesday to avert a threatened Treasury default and reopen the government after a partial, 16-day shutdown. Congress raced to pass the measure by day’s end.
The Dow Jones industrial average soared on the news that the threat of default was fading, flirting with a 200-point gain in morning trading.
“This is a time for reconciliation,” said Senate Majority Leader Harry Reid of the agreement he had forged with the GOP leader, Sen. Mitch McConnell of Kentucky.
McConnell said that with the accord, Republicans had sealed a deal to have spending in one area of the budget decline for two years in a row, adding, “we’re not going back.”
One prominent tea party lawmaker, Sen. Ted Cruz of Texas, said he would oppose the plan, but not seek to delay its passage.
That was a key concession that signaled a strong possibility that both houses could act by day’s end. That, in turn, would allow President Barack Obama to sign the bill into law ahead of the Thursday deadline that Treasury Secretary Jacob Lew had set for action to raise the $16.7 trillion debt limit.
Officials said the proposal called for the Treasury to have authority to continue borrowing through Feb. 7, and the government would reopen through Jan. 15.
There was no official comment from the White House, although congressional officials said administration aides had been kept fully informed of the negotiations.
In political terms, the final agreement was almost entirely along lines Obama had set when the impasse began last month. Tea party conservatives had initially demanded the defunding of the health care law as the price for providing essential federal funding.
Here & Now speaks with NPR’s Ailsa Chang for the latest, and spoke with ABC’s Rick Klein soon after the decision was announced.
- Ailsa Chang, congressional correspondent for NPR. She tweets @ailsachang.
- Rick Klein, political director for ABC News. He tweets @rickklein.
MEGHNA CHAKRABARTI, HOST:
From NPR and WBUR Boston, I'm Meghna Chakrabarti, in for Robin Young.
JEREMY HOBSON, HOST:
And I'm Jeremy Hobson. It's HERE AND NOW. Coming up, the financial world is keeping a close eye on Washington today. We will hear from Bill Gross, the co-founder of the world's largest bond fund, PIMCO.
CHAKRABARTI: But first, let's go to Capitol Hill, where a bipartisan agreement has been reached in the Senate. Majority Leader Democrat Harry Reid and Minority Leader Republican Mitch McConnell outlined the Senate deal to avoid hitting that debt ceiling on the floor of the Senate earlier today. Here's Senator Reid.
SENATOR HARRY REID: This legislation also funds the government through January 15 and averts default through February 7, during which time we can work toward a long-term budget agreement that prevents these frequent crises. And perhaps most importantly, this legislation ends a standoff that ground the work of Washington to a halt this fall.
CHAKRABARTI: But the Senate deal is only a temporary fix, says Senator McConnell.
SENATOR MITCH MCCONNELL: There is a lot more we need to do to get out nation's fiscal house in order. Hopefully, once we've gotten past the drama of the moment, we can get to work on it.
CHAKRABARTI: But the drama of the moment is definitely not over. The Senate will have to put the plan to a vote, and the House will have to decide whether or not to get behind it. Joining us now is NPR congressional correspondent Ailsa Chang. Ailsa, tell us, what's in this Senate plan?
AILSA CHANG, BYLINE: Well, as you heard a little bit, it would basically fund the government through January 15, and the reason that date was chosen was because that's exactly when a new set of sequestration cuts kick in. Those are the across-the-board spending cuts that first went into effect this March. And Democrats really want to find a way to relax those cuts. So they've been trying to find a way to keep negotiations open on funding past January 15.
And as for the debt ceiling, the Senate deal will suspend it until February 7. That would allow the Treasury Department to keep using what is calls extraordinary measures to pay our bills. And the proposal would also set up a framework for negotiations on wider budget issues, things like tax reform and cutting entitlement spending. So under this legislation proposed on the Senate side, a budget conference committee will be created, and they will have to turn in a budget plan by mid-December.
Now, there is one tiny little concession to lawmakers who wanted to weaken President Obama's health care law, but it's a very, very tiny one. It's a provision that would tighten income verification for people who receive subsidies under the Affordable Care Act, just to make sure they really qualify. And actually, income verification is already in the law, but this provision would simply tighten it.
CHAKRABARTI: OK. So that's it regarding the Affordable Care Act. And then it seems like in January and February, two more opportunities for fresh standoffs in 2014. But regarding this deal today, how quickly, do you think, it will move through both chambers in the House and the Senate?
CHANG: Well, it appears that everything will actually get done today, which is great. But I say that with the caveat that things can always change, as we learned yesterday with the multiple attempts on the House side to agree on their bill. There was a fear on the Senate side that tea partiers like Ted Cruz of Texas or Mike Lee of Utah would try to block any bill that didn't do adequate damage to the Affordable Care Act.
But just as Senate leaders were announcing the bipartisan deal on the Senate floor today, Ted Cruz held his own press conference outside the chamber and said he was not going to trying to block the vote after all. So what we could see is this legislation sail pretty smoothly through the Senate, and then it would bounce to the House. The House GOP is having a conference at 3:00.
The Rules Committee would need to meet about how to handle the legislation before it gets to the floor. So it could still be a really, really long day before we're totally done with this legislation here on the Hill.
CHAKRABARTI: OK. Now, Ailsa, as we heard Senator McConnell say a little earlier in that clip, there's still long-term work to do on a budget agreement. So are we eventually going to be back where we started?
CHANG: Well, in theory, no. It's true, the government funding bill only goes through January 15. But now there's a lot of motivation to get into real budget negotiations, tackling the bigger issues I mentioned like entitlement spending and tax reform. And this Senate legislation requires a budget report by mid-December, so we probably won't see, when mid-January rolls around, this down-to-the-wire continuing resolution madness we've seen the last two weeks.
It probably wouldn't be a complete appropriations process with a bunch of separate appropriations bills, but we could see maybe an omnibus appropriations bill, or different minibuses, so to speak. Ultimately it just seems that conservative Republicans have been acknowledging they've lost the fight tying Obamacare to the spending bill. There's a growing acknowledgment that the government shutdown wasn't the way to go to fight the health care law.
CHAKRABARTI: Well, Ailsa Chang is NPR's congressional correspondent. Ailsa, thank you so much.
CHANG: You're welcome. Transcript provided by NPR, Copyright NPR.