US budget standoff: Senate takes over as House plans fail
Posted Thursday, October 17 2013 at 01:00
Frantic US political attempts to avert a federal debt default have pivoted back to the Senate after plans in the House of Representatives collapsed.
Upper chamber leaders resumed work overnight on a deal to raise the US borrowing limit and end a partial government shutdown.
Amid the congressional disarray, a top ratings agency warned of a possible downgrade in US creditworthiness. The US must raise its $16.7 trillion (£10.5 trillion) debt limit by Thursday or risk default. Politicians and economists have warned of global economic consequences unless an agreement can be reached.
The Democratic-controlled Senate took control on Tuesday night, working on a bipartisan deal that aides said would extend the federal borrowing limit until 7 February and fund the government to mid-January.
Senate Democratic leader Harry Reid and his Republican counterpart, Mitch McConnell, were expected to brief their colleagues late yesterday.
But even if a compromise can overcome procedural hurdles, it remains unclear whether it could muster enough votes in the Republican-led House to pass before the 17 October deadline.
The Senate’s negotiations were initially put on hold on Tuesday to give House Republicans a chance to come up with a deal. But the lower chamber’s efforts ended in chaos after two proposals floated in the space of a few hours were torpedoed from right and left, forcing the leadership to shelve plans for a vote.
Amid the legislative turmoil, the Fitch credit agency warned it could downgrade the US government’s AAA rating, while the Dow Jones index ended the day down 133 points.
On Tuesday, President Barack Obama told a said he expected the debt ceiling impasse would be resolved