WASHINGTON — US President Barack Obama's top senate ally said that White House talks on averting a disastrous debt default had resumed and were closing in on a compromise with just three days to act.
"There are negotiations going on at the White House to avert a catastrophic default on the nation's debt. There are many elements to be finalized and there is still a distance to go," he said in a late-night announcement.
Obama, Democratics, and Republicans have been hunting for a breakthrough deal that would ensure the world's richest nation will have cash to pay its bills past a midnight Tuesday (0400 Wednesdsay) deadline.
Reid said that, at the White House's request, he was putting off to 1:00 pm (1700 GMT) a test vote on his own plan to raise the $14.3 trillion US debt ceiling to allow time for a possible compromise.
"They've asked me to give everyone as much time as possible to reach an agreement -- if one can be reached," said the lawmaker. "I'm glad to see this move toward cooperation and compromise. I hope that it bears fruit."
The US economy hit that limit on May 16 and has used spending and accounting adjustments, as well as higher-than-expected tax receipts, to continue operating normally -- but can only do so through August 2.
Business and finance leaders have warned that default would send crippling aftershocks through the fragile US economy, still wrestling with stubbornly high unemployment of 9.2 percent in the wake of the 2008 global meltdown.
Absent a deal, the US government will have to cut an estimated 40 cents out of every dollar it spends, forcing grim choices between defaulting on its debt or cutting back on programs like those that help the poor, disabled and elderly.
Any compromise would still need to clear the divided Democratic-led Senate and Republican-held House of Representatives, where conservatives close to the "Tea Party" movement have called for draconian belt-tightening.
Reid's announcement came after Obama called him and Democratic House Minority Leader Nancy Pelosi to an urgent White House summit with Vice President Joe Biden and spoke by telephone to top Senate Republican Mitch McConnell.
McConnell declared himself "confident and optimistic that we're going to get an agreement in the very near future" and predicted that most Democrats would "fall in line" behind any deal the president cut with Republicans.
"Senator McConnell and I are both confident that we're going to be able to come to some agreement with the White House and end this impasse," Republican House Speaker John Boehner said as they held a joint press conference.
Reid had poured cold water on the upbeat Republican message, bluntly telling McConnell that talk of a looming deal was "not true" and insisting that "merely saying you have an agremeent in front of television cameras doesn't make it so."
Hours later, Reid changed his tune and announced he was putting off a 1:00 am (0500 GMT) test vote on his own plan to ensure that the world's richest country has enough cash to pay its bill after an August 2 deadline.
Senate Republicans had been expected to kill the measure, citing what they considered to be insufficient guarantees of steep spending cuts to offset the increase in the US national debt.
Details of the burgeoning accord were not immediately available, but Reid said he was "confident" that a final deal would meet Obama's condition of putting off another debt fight to after his November 2012 reelection bid.
Earlier, aides said key points of contention included the overall size and makeup of spending cuts, and the creation of a special committee of lawmakers tasked with finding more savings in the near future.
They also included a fight over a enforcement mechanism to ensure that the new panel agree to future spending cuts, notably to cherished social safety net programs, according to a senior Republican Senate aide.
It was unclear whether the deal would be enough to talk ratings agencies down from downgrading the sterling Triple-A US debt rating, causing a spike in interest rates that would throw a wrench into the gears of the already sputtering US economy.
The acrimonious talks came after the Republican-led House of Representatives voted to kill Reid's proposal for raising the debt limit, a day after the Democratic-held Senate did the same to Boehner's plan.
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