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Attention Shifts to US Senate Leaders in Budget Showdown

Attention Shifts to US Senate Leaders in Budget Showdowni
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October 16, 2013 5:01 AM
With the U.S. facing a new credit warning, a bipartisan effort by Democratic and Republican Senate leaders is now back in the spotlight. President Barack Obama is waiting for an acceptable solution to emerge that would extend the debt limit and reopen the federal government.
Attention Shifts to US Senate Leaders in Budget Showdown
With the U.S. facing a new credit warning, a bipartisan effort by Democratic and Republican Senate leaders is now back in the spotlight.  President Barack Obama is waiting for an acceptable solution to emerge that would extend the debt limit and reopen the federal government.
 
Late Tuesday, the Senate Democratic and Republican leaders, Harry Reid and Mitch McConnell, resumed efforts for a bipartisan compromise that was put on hold earlier as events played out in the Republican-controlled House of Representatives.
 
The bipartisan effort in the Senate had proposed funding the federal government through January 15, and temporarily raising the nation's borrowing limit until February 7.
 
In the House of Representatives, Republican Speaker John Boehner gave up on bringing a revised legislative proposal to the House floor in the face of pressure from conservative Tea Party members.
 
In an interview with WABC-TV in New York, Obama rejected suggestions that he has not compromised in the battle with Republicans, and again rejected what he called efforts by the Tea Party to use extreme tactics.
 
"The Democrats have not asked for anything when it comes to making sure the American people's bills are paid on time.  What we have said is there are going to be differences between the parties on priorities but we shouldn't inflict pain on the American people to try to see if one side gets a little extra leverage or gets what they want," said Obama.
 
White House Press Secretary Jay Carney said the president was pleased with progress in the Senate, saying it held potential for resolving an "unnecessary manufactured crisis."
 
"Open the government, and make sure that the United States pays its bills by extending the debt ceiling, and doing that in a way that we don't simply put us on a trajectory to re-create this crisis in a few weeks," said Carney
 
The failed effort by Speaker Boehner would have funded the government only until December 15, while also extending the debt limit until February.
 
After a meeting with President Obama, House Minority Leader Nancy Pelosi said she remained optimistic that Congress will pass "clean" legislation to raise the debt limit and avoid default.
 
"Clean legislation to open government, clean legislation to lift the debt ceiling that will take us on a path to the budget [negotiations] table when any and all issues can be discussed," said Pelosi.
 
With time running out for a debt limit solution, another note of urgency was added late Tuesday in the form of a warning by Fitch, a major credit rating agency.
 
Fitch said it has placed the U.S. credit rating on six-month negative watch, referring to "political brinksmanship and reduced financing flexibility" it said could increase the risk of a U.S. default.
 
In 2011, during the last major political battle in Washington over the credit limit, another major credit agency downgraded U.S. long-term debt to "AA."
 
The White House said Tuesday that the latest impact of the U.S. government shutdown is the inability of a federal agency supporting small businesses to approve new loan guarantees, resulting in more than $1 billion in lost assistance and jeopardizing thousands of jobs.

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