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Senate leaders expressed optimism about forging an eleventh-hour bipartisan agreement Wednesday that would avoid a government default after their House colleagues failed to produce a plan that could pass muster.
Senate Majority Leader Harry Reid (D-Nev.) and Minority Leader Mitch McConnell (R-Ky.) were set to pick up the pieces following a fractious and fruitless night in the House that did little more than run down the clock.
"Given tonight's events, the Leaders have decided to work toward a solution that would reopen the government and prevent default," McConnell spokesman Don Stewart said in a statement. "They are optimistic an agreement can be reached."
Their effort to forge a deal acceptable to both parties to restart the government and renew its authority to borrow was given fresh urgency on Tuesday by a warning issued by Fitch Ratings, the third-largest credit rating agency, which said the debacle in Washington meant it was placing the country's long-term credit rating under review for a potential downgrade.
Treasury Secretary Jacob Lew has said that the government's ability to pay its bills cannot be guaranteed after midnight Wednesday, but the exact moment when that occurs might be days or even weeks later.
If you haven't been following every twist and turn, here are the latest events from each chamber:
In The House:
On Tuesday evening, House Republicans tried and failed to produce their own plan for ending the stalemate, but in the end it wasn't Democrats who scuttled their efforts, but divisions among GOP lawmakers.
In the early evening, the House had crafted a plan to end the shutdown and raise the debt ceiling in exchange for some changes in the Affordable Care Act, which has been a key stumbling block throughout the weeks of negotiations. But when Heritage Action for America, a lobby group affiliated with the conservative Heritage Foundation weighed in against the plan, what little resolve that might have existed Republicans quickly evaporated.
As Politico writes of House Speaker John Boehner:
"[Battered] from three years of intra-party battles, [he] was caught between at least three different GOP factions as he tried to craft a compromise agreement: Republicans who didn't want to slash government health care contributions for Capitol Hill aides, members who thought repealing the medical device tax was a giveaway to corporate America and conservatives, who thought Republican leaders were too soft on Obamacare.
"Boehner was unable to craft a deal that would satisfy all of the groups, forcing him to shelve his plan and show the world — again — just how hard it is for him to rule the raucous House Republican Conference.
"No amount of political gymnastics would help him reach the crucial 217 vote-level to send a bill to the Senate. GOP aides said that Boehner was — at a minimum — 20 to 30 votes short of the target."
Meanwhile, In The Senate:
Amid the disarray in the House, the Senate "quickly moved to pick up the pieces," as The Washington Post writes. The Senate re-started talks of their own and were thought to be close to a deal before they adjourned just after 10 p.m.
Presumably the Senate plan would be close to a proposal outlined Tuesday that would fund the government through Jan. 15 and raise the ceiling until Feb. 7 in exchange for "substantive" discussions on entitlements and other Republican budget priorities.
The White House has hinted that it would agree to such a deal.
Even so, Politico, quoting unnamed sources, says that "the deal is essentially done."
"Reid and McConnell are expected to brief their respective caucuses Wednesday, hours before the country could fail to pay its bills for the first time in history. Cooperation will be needed from members of both parties in order to avoid default as well as to end the first government shutdown in 17 years. And a Senate plan will need to clear the House."
And passing the House is still the biggest question.
We'll be updating this post with the latest developments. Stay tuned.
Updated At 9:40 a.m. ET: Deal Reportedly 'Very Close'
Reuters, quoting a "senior Senate aide," says that Senate leaders are "very close" to announcing a deal on the debt limit extension and that the chamber would move "quickly" to pass it.
The news agency reports that the Senate leadership is "in talks with House leaders on ways to win fast passage" of a deal in both chambers.
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