On the edge: House shutdown plan fails; now Senate

WASHINGTON (AP) — Time growing desperately short, Senate leaders took command of efforts to avert a Treasury default and end

the partial government shutdown Tuesday night after a last big attempt by House Republicans abruptly collapsed.

Aides to both Senate Majority Leader Harry

Reid and the Republican leader, Mitch McConnell, expressed revived

optimism about

chances for a swift agreement — by Wednesday at the latest — that

could pass both houses. Their efforts toward a bipartisan

resolution had seemed likely to bear fruit a day earlier before

House conservative were given a last-minute chance for their


As hours ticked down toward Thursday's Treasury deadline, the likeliest compromise included renewed authority for the Treasury

to borrow through early February and the government to reopen at least until mid-January.

While a day of secret meetings and frenzied maneuvering unfolded in all corners of the Capitol, Sen. Barbara Mikulski, D-Md.,

stood on the Senate floor at midafternoon and declared, "We are 33 hours away from becoming a deadbeat nation, not paying

its bills to its own people and other creditors."

In New York, the stock market dropped and

the Fitch rating agency warned that it was reviewing the government's

AAA credit

rating for a possible downgrade, though no action was near. The

firm, one of the three leading U.S. credit-ratings agencies,

said that "the political brinkmanship and reduced financing

flexibility could increase the risk of a U.S. default."

According to Treasury Secretary Jacob Lew,

unless Congress acts by Thursday, the government will lose its ability

to borrow

and will be required to meet its obligations relying only on cash

on hand and incoming tax receipts. President Barack Obama

and numerous other officials in government and finance have warned

of severe economic consequences if federal obligations

come due that can't be paid.

By all accounts, though, an end seems near

for the impasse that has once again exposed a government so divided that

it sometimes

borders on dysfunction. Though the House failed to muster

sufficient support for a conservatives-only bill in the GOP-majority

chamber on Tuesday, enough Republicans there seem likely to join

House Democrats to approve a bipartisan version if it can

be approved by the Senate and sent to them.

Politically, neither party is faring well, but polls indicate Republicans are bearing the brunt of public unhappiness as survey

after survey shows their approval ratings plunging.

There was no indication Tuesday night of the

terms of a possible deal under discussion by Reid and McConnell,

although the

contours of an agreement had already come into shape on Monday,

before what amounted to a daylong detour to give Speaker John

Boehner and House Republicans time to craft their solution.

As it stood previously, the bipartisan Senate talks were focused on a plan to allow the Treasury to borrow freely through

Feb. 7 and reopen the government with enough funds to carry over to mid-January.

Congressional negotiators would be appointed to seek a long-term deficit reduction plan, and in the meantime federal agencies

would receive increased flexibility to deal with the impact of across-the-board spending cuts due to take effect on about

Jan. 15.

With Republicans opposed, the likelihood faded for including an earlier proposal to delay a $63-per-person fee that the nation's

health care overhaul would impose on companies for all who receive coverage under an employer-provided plan.

It appeared likely that any deal would include a provision requiring the Department of Health and Human Services to verify

the income of individuals seeking federal subsidies to purchase coverage under Obamacare.

Before Tuesday was devoted to the House Republicans' effort, those Senate negotiations had seemed headed for success.

House Republican officials unveiled their measure at midmorning, then revised it in hopes of building more support. In its

final public form, it would have permitted the Treasury to borrow normally until Feb. 7 and the government to reopen with

sufficient funds to carry it to Dec. 15.

Additionally, members of Congress, the president, vice president and thousands of aides would no longer be eligible to receive

employer health care contributions from the government that employs them.

The leadership projected confidence, and Michael Steel, a spokesman for Boehner said in a statement, "The House will vote

tonight to reopen the government and avoid default."

Within a few hours though, objections came

from all corners of the rank and file. And Heritage Action, a group with

tea party

ties, announced its opposition to the measure it said "will do

absolutely nothing to help Americans who are negatively impacted

by Obamacare." It said it would include the vote in its

determinations next year on which candidates to support in the midterm


That verdict came after Republicans

jettisoned a pair of provisions that had drawn objections from the White

House and Democrats.

One would have delayed a medical device tax created under the new

health care law known as Obamacare. The other would have

imposed tougher income verification standards on individuals and

families seeking subsidies for care under the law.

Democrats had viewed both as concessions to Republicans, and deemed their inclusion as a violation of Obama's vow not to pay

a "ransom" to the GOP for passing essential funding and borrowing measures.

The day's events prompted an outbreak of partisan rhetoric, mixed with urgent warnings that both the U.S. and global economies

could suffer severe damage quickly unless Congress acted by Thursday.

Even something of an appeal for heavenly aid was thrown in, as Rep. Steve Southerland of Florida led House Republicans in

a rendition of "Amazing Grace" at the beginning of a rank-and-file meeting called to discuss a way out of the impasse.

Speaking with reporters, Boehner said, "I

have made clear for months and months that the idea of default is wrong

and we shouldn't

get anywhere close to it."

Democrats jumped on Boehner and the plan he produced.

In unusually personal remarks, Reid said the Ohio Republican had "once again tried to preserve his role at the expense of

the country."

That was a reference to a rebellious rank

and file in the House, who routinely seek to push Boehner and the rest

of the leadership

to the right. A group met Monday night with Texas Sen. Ted Cruz,

who last summer played a public role in a campaign to demand

defunding of Obamacare as the price for preventing a partial

government shutdown.

The Democratic attacks were too much for some Republicans who have been among those most vocal in calling for a bipartisan

solution to the impasse.

"It's piling on and it's not right," Sen.

John McCain, R-Ariz., said of the response from the Democrats. "To


reject what the House and the speaker are doing — and I think he's

pretty courageous in what he's doing — in my view is not

serving the American people."

The House had been effectively sidelined in recent days as Reid and McConnell engaged in intense negotiations to reopen the

government and raise the debt limit.

The twin crises began more than three weeks ago, when some lawmakers in the House insisted on seeking the defunding of Obamacare

as the price for preventing a partial shutdown of the government.

The White House refused, and the

Democratic-controlled Senate rejected legislation to achieve the GOP

goal, as well as subsequent

legislation that contained scaled-back concessions on the health

care overhaul.

The partial shutdown, which began on Oct. 1, swiftly merged with the approaching debt crisis.

Whatever the outcome, the all-out assault on Obamacare that became a tea party rallying cry last summer was long gone, repulsed

by the president and his Democratic allies in Congress.

Instead, Republican disapproval ratings have

plummeted in public opinion polls in the past two weeks, vindicating


from Boehner, McConnell and other party elders that the original

strategy of threatening to shut down the government in hopes

of wiping out the overhaul was badly flawed.