U.S. Fiscal Negotiations Sputter as Government Shutdown Nears

Negotiations in Congress are believed to put an end to a U.S. fiscal crisis after bipartisan talks broke down in the House of Representatives and shifted to Senate leaders.

Senate Majority Leader Harry Reid, a Democrat, held an initial session with Senate Republican leader Mitch McConnell on Saturday. Photo: KP Tripathi/Flickr

After Saturday’s negotiations Senate leaders remained uncertain about their ability to reach any agreement quickly to end government shutdown.

According to reports, Thursday is the deadline for raising the debt ceiling, which would  prevent a possible government default. The Senate initially was scheduled to meet on Sunday, but the U.S. House of Representatives was not, so Congress will be cutting it close, reports Reuters.

“Economists say it won’t be long before financial markets react negatively to this continued uncertainty,” Reid said on the Senate floor. “The life savings of ordinary Americans are at risk.”

The list of issues-to-be-solved includes the duration of the debt ceiling increase.

House Republicans were pushing a boost that would last only six weeks, which would also end in another government showdown in the middle of the holiday season. Democrats said they are for pushing the next debt ceiling deadline at least well into the new year.

Harry Reid and other Senate Democratic leaders rushed to the White House to meet with the U.S. president, but said nothing to reporters as they left.

At the meeting, President Obama and Senate Democratic leaders decided that talks should continue between Reid and McConnell, a senior party aide said.

“But Democrats’ position remained the same: Democrats are willing to negotiate on anything Republicans want to discuss as soon as we reopen the government and pay our bills,” the aide added.

Reid and other Senate Democratic leaders went to the White House to confer with Obama in the afternoon, but said nothing to reporters as they left after an hour and 15 minutes.

At the meeting, Obama and Senate Democratic leaders agreed that talks should continue between Reid and McConnell, a senior party aide said.

“But Democrats’ position remained the same: Democrats are willing to negotiate on anything Republicans want to discuss as soon as we reopen the government and pay our bills,” the aide added.

Although McConnell initiated talks with Reid, the Majority leader has maintained a relatively low profile as he faces a tough re-election campaign back home in Kentucky.

“We had a good meeting” was all McConnell told reporters.

According to sources, while some senators were hopeful now that Reid and McConnell were negotiating, no clear path to a deal was evident.

“Senator Reid and Senator McConnell are talking to each other for the first time and that’s good,” Republican Senator Roy Blunt said.

As the debt ceiling deadline is getting closer, opinion polls show Americans’ loosing their patience with Republican tactics that led to the government shutdown, enhancing prospects of a deal.

“Markets rose on hope for a deal, so markets are likely to fall as reality check alters sentiment,” said David Kotok, co-founder and chief investment officer at Cumberland Advisors. Kotok said he believed there would be no deal before Thursday, adding, “This fight is a long way from over.”

Companies and trade associations have been stepping up their efforts on Capitol Hill as the debt ceiling deadline approaches.

“I was optimistic yesterday morning,” David French, the chief lobbyist for the National Retail Federation, told Reuters on Saturday. “I’m a little less optimistic today and so are folks I’ve talked to” on Capitol Hill.

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