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Debt ceiling deal agreed at eleventh hour to end government shutdown

Few concessions in bill to pull US back from brink of historic default and beat Thursday deadline

By David Usborne

An eleventh-hour deal crafted in the US Senate has been announced tonight to pull the United States back from the precipice of defaulting on its debt and to re-open the government until the middle of January next year.

“Our country came to the brink of disaster,” Senator Harry Reid, the Democrat majority leader, conceded announcing a compromise bill on the Senate floor. “It’s been a long challenging few weeks for Congress and the country,” Mitch McConnell, the Republican minority leader, added, confirming the sealing of the package.

The bill still required passage by both the Senate and the House of Representatives before being sent for signature by President Barack Obama, perhaps as early as tonight. Crucially, Ted Cruz, the Tea Party senator from Texas said that he would not attempt to use parliamentary rules to gum up the vote in the Senate as some had feared.

The apparent end to the crisis came just hours before a Thursday deadline when the US Treasury said it would run out of wiggle room to pay all its bills without an increase of the debt ceiling, including to holders of US Treasury bonds, raising the spectre of a potentially catastrophic debt default. The partial shutdown of the US government is already in its third week, with 350,000 federal governments workers furloughed at home without pay.

Yet the underlying squabbles are by no means resolved. The deal would set up a bi-partisan, bi-cameral committee to attempt one more time to settle - by Christmas - the broader range of spending and budget issues that have been so toxic in this town for so long. Because the funding for the government would only extend to mid-January and the debt ceiling increase until mid-February there is a risk the same drama will be playing out all over again a few months from now. “This isn’t the last crisis we are going to go through,” Senator John McCain of Arizona noted.

For now, the deal represents a white flag for conservative Republicans and the right-wing Tea Party, which achieved almost nothing of what they set out to achieve with this crisis, notably to pare back or delay President Obama’s healthcare overhaul legislation known as Obamacare. Put forward instead was an almost entirely “clean bill” with only slight amendments to the health law to guard against fraudulent claims for government help by citizens to pay premiums.

If privately jubilant, the White House declined to gloat particularly with the vote on the bill in the House still outstanding tonight. “There are no winners here,” spokesman Jay Carney said, noting the damage already done by the stand-off to the economy. “There is already a price that has been paid.” 

Aides nonetheless seemed hopeful the bill would easily win passage in the Senate first. Thereafter in the House it was likely to win support from almost all the minority Democrats with a rump of moderate Republicans, leaving the Tea Party wing out in the cold. Mr Obama had all along insisted he would not be held to “ransom” by the Tea Party unhappy with Obamacare which is law already.

Efforts by John Boehner, the House speaker, to push a tougher version of his own through the House had fallen apart late Tuesday night, which passed the ball to the Senate. He was unable to bring all of his conservative flank on board for his bill, a humiliating spectacle for a man who holds one of the most powerful positions in Washington.

Republican recriminations were already beginning for its misbegotten tactics. “This package is a joke compared to what we could have gotten if we had a more reasonable approach,” Senator Lindsey Graham of South Carolina complained. “For the party, this is a moment of self-evaluation, we are going to assess how we got here. If we continue down this path, we are really going to hurt the Republican Party long-term.”

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