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15 Oct, 2013 11:19

Senate leaders hint at looming deal to end shutdown, raise debt ceiling

A Senate deal to end the government shutdown and avert the US from defaulting on its debt might be in sight, as both Republican and Democrat leaders share an optimistic outlook, following an intense day of talks.

Senate Majority Leader Harry Reid, a Democrat, and his Republican counterpart, Mitch McConnell, hinted on Monday they were nearing a deal that would resolve the political stalemate, end the two-week-long government shutdown and extend the Treasury Department’s borrowing authority.

According to the leaked Senate deal, the debt ceiling would be raised to a level necessary to allow the country to keep on borrowing till February 2014. In case the lawmakers do not manage to strike a deal, the US might be only two days away from financial collapse. October 17 is when, according to US Treasury Department estimates, the country will reach its $16.7 trillion borrowing limit.

As the financial D-Day nears, the world is on alert. It’s been estimated that 16.8-trillion dollars in securities held by investors is at risk.

We’ve made tremendous progress”, Reid said. “We are not there yet, but tremendous progress. And everyone just needs to be patient. Perhaps tomorrow will be a bright day.”

McConnell, usually a fierce critic of Reid, agreed with his counterpart this time.

"I share his optimism that we're going to get a result that will be acceptable to both sides," he said.  

The looming Senate deal will only see some minor changes to President Obama’s landmark healthcare law. This has already caused mixed reactions among conservative Republicans, who wanted to see a major overhaul for the bill.

Some, like Senator Rand Paul of Kentucky, believe resolving the government deadlock outweighs all other concerns. “We need to get an agreement and open the government back up,” he said, as cited by The Washington Post.

There are however, fierce hardliners within GOP, who are not ready to compromise. "No deal is better than a bad deal," Representative Joe Barton of Texas said, suggesting that even if the deal is struck in the Senate, the House might not follow suit.

This tough stance might well cost the party supporters, as 74 percent of Americans disapprove of the way GOP has handled the standoff, according to a Washington Post/ABC News poll released on Monday. The same poll shows a 53 percent disapproval rating for President Obama.

FL-CIO President Richard Trumka speaks during a protest held by furloughed federal workers outside the U.S. Capitol to demand an end to the lockout of federal workers caused by the government shutdown October 4, 2013 in Washington, DC. (Win McNamee/Getty Images/AFP)

Meanwhile, the self-inflicted shutdown has been costing the US an estimated $160 million a day.

The government has run out of cash to pay some 800,000 federal workers during the deadlock. Hundreds of patients cannot be accepted for treatment, including cancer patients, as 75% of staff are not working because of the shutdown.

Veterans are enraged about war memorials being closed for the same reason, and over the past two weeks they have regularly staged protests, urging the government to do their job and get the budget passed.  

The Executive Director at the American Jobs Alliance, Curtis Ellis, believes it’s high time for the politicians to put their ambitions aside to avert the looming crisis.  

It could have quite a catastrophic effect”, Curtis told RT. “We are talking about global economic financial chaos. I prefer not to play roulette like that. The depths of human folly are fathomless, but we are talking about politicians and with politicians it’s even worse. I do like the fact that we have democracy here and a back and forth between branches of government, but I do hope that it’s principals that they are standing on, not ego and not a desire to save face”.  

Americans are growing ever more impatient for the crisis to be resolved. A Reuters/IPSOS poll released on Tuesday shows growing concern for the debt ceiling issue, as only 25 percent believe it’s “overblown.”

And the concern has long spilt beyond the US. The fact that the United States has again put the global economy on the brink of another crisis is not doing the country’s international image any favors, according to economist and former British treasury official, Neil Mackinnon.

I think these periodic crises undermine confidence in US economic policy, they undermine confidence in the US dollar as the world’s leading reserve currency,” Mackinnon told RT. “And if this dysfunction continues then over time international investors will be looking for a reform of the international monetary system, and they’ll be challenging the role of the dollar as the leading reserve currency."

Lack of trust is already in evidence. The loudest anti-American warning has come from China, the biggest US creditor.  An editorial published by the Chinese state-owned press agency, Xinhua, called on Monday for de-Americanization of the world.