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Senate leaders optimistic on US debt ceiling deal

Both the leaders of the Democratic and Republican senators are hopeful of a deal being reached, but nothing has been formalised yet.

President Barack Obama speaks to reporters today as he visits Martha's Table, which prepares meals for the poor
President Barack Obama speaks to reporters today as he visits Martha's Table, which prepares meals for the poor
Image: AP Photo/Charles Dharapak

THE US SENATE’S two top leaders both expressed optimism today that they were closing in on an agreement to prevent a national financial default and reopen the government after a two-week partial shutdown.

After meeting twice with his Republican counterpart, Democratic Majority Leader Harry Reid opened the Senate session by saying he was ‘very optimistic we will reach an agreement this week that’s reasonable in nature.”

Moments later, Republican leader Mitch McConnell seconded Reid’s view.

They spoke after what McConnell termed “a couple of very useful discussions.”

A White House meeting with House and Senate leaders scheduled for the afternoon was postponed to give negotiators more time.

In addition to raising the debt limit and reopening the government, officials said, the two leaders were discussing a possible tightening in income verification requirements for individuals who qualify for subsidies under the health care law known as Obamacare. Democrats were resisting a Republican-backed proposal to suspend a medical device tax that was enacted as part of the health care law. The tax is widely unpopular among lawmakers in both parties, but the outcome of that disagreement remained unclear.

Officials said House and Senate negotiators would be appointed to seek a deficit-reduction agreement that could ease or eliminate a new round of automatic spending cuts scheduled to take effect in January. While the current round of these cuts fell on both domestic programs and defense, the upcoming reductions would hit primarily the Pentagon.

Visiting a Washington charity, Obama mentioned the possible progress in the Senate.

“My hope is that a spirit of cooperation will move us forward over the next few hours,” the president told reporters.

Otherwise, he warned that the threat of default was legitimate.

“If we don’t start making some real progress both in the House and the Senate, and if Republicans aren’t willing to set aside some of their partisan concerns in order to do what’s right for the country, we stand a good chance of defaulting,” he said.

The shutdown has furloughed 350,000 federal workers, impeded various government services, put continued operations of the federal courts in doubt and stopped the IRS from processing tax refunds.

Economists see greater financial danger from a default. Christine Lagarde, the International Monetary Fund’s managing director, spoke fearfully about the disruption and uncertainty, warning on Sunday of a “risk of tipping, yet again, into recession” after the fitful recovery from 2008.

Read: Obama meets with Republicans in bid to end crisis

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Associated Press

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