US inches toward deal to reopen govt

US Senate leaders were nearing a deal on Tuesday in talks to reopen the US government and prevent a default on American debt that economists say could tip the global economy back into recession.

But an agreement in the Senate would only move the country halfway toward solving a bitter fight between Republicans and US President Barack Obama's Democrats over government spending. Many conservatives in the House of Representatives were standing fast against the plan that would fund the government through Jan 15 and allow the Treasury Department to borrow money to pay US bills until February.

US House Majority Whip Kevin McCarthy is closely chased by reporters on Monday. As the Thursday deadline draws near, US senators said they were closing in on a deal that would reopen the government. Joshua Roberts / Reuters

With just two days left before the Treasury says it will run out of borrowing capacity, congressional aides predicted Senate Majority Leader Harry Reid and Republican leader Mitch McConnell could seal an agreement by midday, easing dual crises that have sapped confidence in the world's dominant economy and shaken support for Republicans. Both House and Senate Republican leaders scheduled private meetings with party members on Tuesday.

Obama telephoned McConnell on Monday to talk about the emerging deal, a McConnell aide said. Congressional leaders had been scheduled to meet with Obama at the White House on Monday, but the meeting was postponed.

With Republican poll numbers plummeting and US citizens growing weary of a shutdown entering its third week, Senate Republicans in particular were eager to end the partial government shutdown - and avoid an even greater crisis if the government were to default later this month.

The partial US government shutdown, which has furloughed 350,000 federal workers, began on Oct 1 after Congress failed to pass a bill to temporarily fund the government. Separately, if Congress doesn't approve a measure increasing the amount of money the government is allowed to borrow, the Obama administration says it will not be able to pay the country's bills on time, risking a default that analysts say could prove catastrophic for the economy. Both legislative measures are normally routine.

The plan under consideration by Reid and McConnell is far from the assault on Obama's signature health care reform law that conservative tea-party Republicans originally demanded as a condition for the 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.

AP - Reuters