White House, GOP Discuss Potential Debt Limit Pact | WPN World People News

White House officials and congressional Republicans are reaching toward a potential end to their bitter debt limit showdown, raising hopes that a deal could be in place by Tuesday to avert a possible federal default.

Senate Republican leader Mitch McConnell said on CNN Sunday that he was optimistic a debt ceiling deal will be reached soon, even going so far to say he was "very close" to being able to recommend an agreement to Republican lawmakers.

McConnell (R-KY) said lawmakers are looking at a $3 trillion package that would raise the debt ceiling in two stages through the elections next year.

Sen. Charles Schumer, meanwhile, told CNN that an "enforcement mechanism" for future deficit reduction remains a key issue in negotiations aimed at raising the U.S. debt limit.

Schumer (D-NY) cautioned that "there is no final agreement," and that much remains to be discussed. Future deficit reductions, he said, should not cut Medicare or Medicaid benefits but provide defense cuts of "equal sharpness and magnitude" to cuts in nonmilitary discretionary spending.

The White House also expressed caution."We don't have a deal," senior White House adviser David Plouffe said Sunday on NBC's Meet the Press. However, he said, both sides are generally in agreement on an emerging package that would cut the deficit in two stages, with key details still being worked out.

Details of a possible accord began emerging Saturday night after Senate Majority Leader Harry Reid (D-NV) said on the Senate floor that the two sides were trying to nail down loose ends and complete an agreement.

Saturday night, Reid delayed a vote on his own debt ceiling package that had been set for 1 a.m. Sunday. The delay was seen as a sign of movement in negotiations.

"I'm glad to see this move toward cooperation and compromise, and hope it bears fruit," he said.

Any pact would have to quickly pass both chambers of Congress after a rancorous period that has seen the two parties repeatedly belittle each other's efforts to end the standoff.

Even so, the deal under discussion offers wins for both sides. Republicans and their tea party supporters would get spending cuts at least as large as the amount the debt ceiling would grow and avoid any tax increases. For President Obama and Democrats, there would be no renewed battle over extending the borrowing limit until after next year's elections.

Under the possible compromise, the debt limit would rise by an initial $1 trillion.

A second, $1.4 trillion increase would be tied to a specially created congressional committee that would have to suggest deficit cuts of a slightly larger amount. If that panel did not act or if Congress rejected their recommendations, automatic spending cuts would be triggered that could affect Medicare and defense spending, two of the most politically sacrosanct programs.

Obama and Democrats have been insisting on a one-shot debt ceiling increase of about $2.4 trillion, enough to last until 2013.

In a bill the House approved Friday and the Senate rejected, Republicans would initially extend federal borrowing authority by $900 billion, accompanied by $917 billion in spending cuts. They would tie a second $1.6 trillion debt limit boost to spending cuts of up to $1.8 trillion and approval of the balanced budget amendment.

The government has exhausted its $14.3 trillion borrowing limit and has paid its bills since May with money freed up by accounting maneuvers.

The Treasury Department has said it will run out of available cash Tuesday without a debt ceiling extension. The administration has warned that an economy-shaking default would follow that could balloon interest rates and wound the world economy.

Source: NPR