The sun rises on the U.S. Capitol dome as the prayer group Faithful Filibuster — Carol Busroe, Gary Cook, Jim Wallis and Ray East — pray for a solution to end the shutdown and extend the Treasury Department’s borrowing power. 
 
 Oct. 16, 2013 The sun rises on the U.S. Capitol dome as the prayer group Faithful Filibuster — Carol Busroe, Gary Cook, Jim Wallis and Ray East — pray for a solution to end the shutdown and extend the Treasury Department’s borrowing power. Melina Mara/The Washington Post 
 
 The federal government is in the third week of a shutdown while Congress worked out a deal to fund its operations and to avoid a possible default because of the debt limit. 
 
 Meanwhile, furloughed federal workers express their displeasure as the government shutdown headed into its third week. 
 
 Meanwhile, furloughed federal workers express their displeasure as the government shutdown headed into its third week. 
 
 What started as a mad dash to strike a deal to lift the federal debt limit slowed to a crawl over the weekend as stalemated Senate leaders waited nervously to see whether financial markets would plunge Monday morning and drive the other side toward compromise. 
 
 Republicans seemed to think they had more to lose. After talks broke down between President Obama and House leaders, GOP senators quickly cobbled together a plan to end the government shutdown — now entering its third week — and raise the $16.7 trillion debt limit. Senate Minority Leader Mitch McConnell (R-Ky.) then asked Majority Leader Harry M. Reid (D-Nev.) to elevate negotiations to the highest level. 
 
 On Sunday — with the Treasury Department due to exhaust its borrowing power in just four days — Reid was wielding that leverage to maximum advantage. Rather than making concessions that would undermine Obama’s signature health-care initiative, as Republicans first demanded, Democrats are now on the offensive and seeking to undo what has become a cherished prize for the GOP: deep agency spending cuts known as the sequester. 
 
 Reid and McConnell spoke only once Sunday, a telephone call in the afternoon, aides said. As he closed a rare Sunday session of the Senate, Reid characterized the conversation as “productive” and “substantive.” 
 
 “I’m optimistic about the prospects for a positive conclusion to the issues before this country today,” he said. 
 
 With legislative action stalled on Capitol Hill, lawmakers are getting creative with where they shine the spotlight on the government shutdown. (The Washington Post) 
 
 But the shift in focus away from the imminent threat of a first-ever default on the U.S. debt sparked outrage among Republicans and alarm among the world’s financial leaders, meeting this weekend in Washington. 
 
 Christine Lagarde, managing director of the International Monetary Fund, warned on NBC’s “Meet the Press” that a failure by the United States to make scheduled payments to investors “would mean massive disruption the world over. And we would be at risk of tipping yet again into a recession.” 
 
 Republicans, meanwhile, said any agreement to back away from the sequester cuts would be opposed by GOP senators and doomed in the Republican House. 
 
 The fight over the debt limit is “typically a point where you try to create reforms and reduce deficits, so to agree to something that raises spending from previously agreed-to levels, I just can’t imagine that,” said Sen. Bob Corker (R-Tenn.). “I just can’t imagine how that has any possibility of becoming law.” 
 
 Democrats insisted that they have no interest in rolling back the sequester cuts now. Reid noted that the Senate had already approved and sent to the House a measure that would leave the cuts in place through the middle of November, with “not a word about breaking [spending] caps,” Reid said on the Senate floor. 
 
 Instead, Democrats said they objected to a debt-limit plan developed by Sen. Susan Collins (R-Maine) because it would permit the cuts to stay in place through March, allowing another round of sequester cuts to hit on Jan. 15. 
 
 At that point, agency spending for fiscal 2014, which began Oct. 1, would be on track to fall roughly $90 billion lower than Democrats have proposed. And with the fiscal year half over, Democrats would have scant opportunity to renegotiate the numbers, a top priority. 
 
 On Sunday, Democrats familiar with the talks said Reid was pressing McConnell to accept a quicker deadline on a temporary measure to fund federal agencies and reopen the government and a longer deadline for raising the debt limit. Collins’s proposal would extend the Treasury Department’s borrowing authority only until the end of January. 
 
 “The plan would be, open up the government immediately for a period of time before the sequester hits [on Jan. 15] and then have serious discussions where we might be able to undo the sequester,” Sen. Charles E. Schumer (D-N.Y.), the No. 3 Democrat in the Senate, said on CBS’s “Face the Nation.” “I’m optimistic that could work.” 
 
 Schumer noted that House Republicans have already offered to roll back the sequester cuts in a proposal the White House rejected Friday. That plan would have immediately suspended enforcement of the debt limit and reopened the government in exchange for a plan to replace sequester savings in 2014 (and perhaps longer) with reductions to Social Security and Medicare proposed in Obama’s budget. 
 
 “That was one place where the House Republicans and the president were not, you know, at total loggerheads,” Schumer said, suggesting that a deal could be cut if Republicans would consider new revenue along with cuts to entitlement programs. 
 
 McConnell appeared to be far less optimistic. The sequester cuts are part of $2.1 trillion in agency spending cuts over 10 years included in the Budget Control Act, the measure that raised the debt limit in 2011. Initially, Republicans, too, wanted to replace the sequester, particularly the portion that falls on the Pentagon. But since Obama won tax hikes on the wealthy as part of a year-end fight over the “fiscal cliff,” McConnell has taken to casting the sequester as a significant GOP victory from which the party cannot retreat. 
 
 “I think our main goal going into the year-end discussion is to not walk away from the bipartisan agreement that we made two years ago to reduce spending,” he told reporters this summer. 
 
 On Sunday, McConnell maintained a stony silence, failing to show up at the Capitol for his usual opening speech on the Senate floor. Instead, he issued a statement throwing his support for the first time behind the Collins proposal, calling it a “bipartisan plan” brokered with five other GOP senators and six senators who caucus with Democrats. 
 
 “It would reopen the government, prevent a default . . . and maintain the commitment that Congress made to reduce Washington spending through the Budget Control Act — the law of the land,” McConnell said. “It’s time for Democrat leaders to take ‘yes’ for an answer.” 
 
 Some Democrats tend to agree with McConnell. During a caucus meeting Saturday, Reid and his leadership team spent more than an hour arguing to Democrats anxious about default that the Collins plan is not a good deal for the party. On Sunday, Sen. Joe Manchin III (W.Va.), one of the Democrats working with Collins, defended the proposal on “Fox News Sunday” as having “a little bit of move for everybody. In a divided government, you can’t have it all your way.” 
 
 Soon after McConnell’s statement appeared, however, the Collins collaborators hustled into Reid’s office just outside the Senate chamber. Some of them were still inside when a joint statement was issued on behalf of Sens. Heidi Heitkamp (D-N.D.), Mark Pryor (D-Ark.), Amy Klobuchar (D-Minn.), Angus King (I-Maine) and Joe Donnelly (D-Ind.) “responding to Senator McConnell’s comments.” 
 
 “We have been involved in productive, bipartisan discussions with Senator Collins and other Republican senators,” the statement said, “but we do not support the proposal in its current form.” 
 
 An hour later, an update appeared adding Manchin’s name. “NOTE,” it said: “Senator Manchin was unavailable when the original statement was sent out.” 
 
 Treasury Secretary Jack Lew has said that if Congress fails to lift the debt limit, he will exhaust his borrowing authority on Thursday. At that point, he will have to rely on a cash balance of about $30 billion and incoming revenue to pay the nation’s bills. 
 
 Independent analysts say Lew will not begin missing payments immediately but will begin to run short of funds no later than Nov. 1, when nearly $60 billion is due to Social Security recipients, Medicare providers, active-duty military service members and civil-service retirees. 
 
 Investors are next due to collect interest on Treasury bonds — perhaps the most important payments from the perspective of global markets — on Oct. 31. 
 
 Still, many lawmakers are leery of missing the Thursday deadline — particularly Republicans, who are already getting hammered in public opinion polls over the government shutdown. The Dow Jones industrial average soared Friday on news that Obama and congressional Republicans were finally talking. 
 
 “Look, I guess we can get lower in the polls. We’re down to blood relatives and paid staffers now,” Sen. John McCain (R-Ariz.) joked on “Face the Nation.” “But we’ve got to turn this around. And the Democrats had better help us.” 
 
 Jeff Simon contributed to this report. ||||| The sun rises on the U.S. Capitol dome as the prayer group Faithful Filibuster — Carol Busroe, Gary Cook, Jim Wallis and Ray East — pray for a solution to end the shutdown and extend the Treasury Department’s borrowing power. 
 
 Oct. 16, 2013 The sun rises on the U.S. Capitol dome as the prayer group Faithful Filibuster — Carol Busroe, Gary Cook, Jim Wallis and Ray East — pray for a solution to end the shutdown and extend the Treasury Department’s borrowing power. Melina Mara/The Washington Post 
 
 The federal government is in the third week of a shutdown while Congress worked out a deal to fund its operations and to avoid a possible default because of the debt limit. 
 
 Meanwhile, furloughed federal workers expressed their displeasure as the government shutdown headed into its third week. 
 
 Meanwhile, furloughed federal workers expressed their displeasure as the government shutdown headed into its third week. 
 
 Senate leaders began negotiations Saturday aimed at reopening federal agencies and avoiding a government default after every other effort to end Congress’s impasse crumbled in the previous 48 hours. 
 
 Senate Majority Leader Harry M. Reid (D-Nev.) and Minority Leader Mitch McConnell (R-Ky.) took over the talks, which had led nowhere in recent days. House Speaker John A. Boehner (R-Ohio) acknowledged early Saturday that his discussions with President Obama had collapsed and that the Senate was the last hope to avert a financial disaster. 
 
 McConnell and Reid held an hour-long meeting in Reid’s office with two close Senate allies and left the Capitol by mid-afternoon. Late Saturday night neither side cited any progress, and Republicans reported that Democrats were dug in on their demand to increase funding for federal agencies. 
 
 During the fiscal crises that have gripped Capitol Hill over the past five years, each resolution and compromise came after Senate leaders picked up the pieces of failed efforts between the White House and the House. 
 
 In the morning session, Reid rejected a proposal crafted by rank-and-file Republicans with some Democratic input to raise the federal debt limit until Jan. 31 and fund federal agencies through the end of March. It also called for minor adjustments to Obama’s health-care law . 
 
 Senate Majority Leader Harry M. Reid (D-Nev.) addressed the shutdown during a press conference on Capitol Hill on Saturday, saying Susan Collins's plan to end the shutdown and extend the debt ceiling is "not going to go any place." (AP) 
 
 At an afternoon news conference, Reid said he wanted a shorter period for stopgap funding and a longer extension of the Treasury’s borrowing authority. Reid particularly wants to scale back deep automatic spending cuts known as the sequester, which were passed during the 2011 debt-ceiling showdown and will take effect every January for the next decade, unless Congress amends them. 
 
 Sen. Richard J. Durbin (Ill.), the No. 2 Democrat in the Senate, called that issue “really the single biggest sticking point.” 
 
 The slow-moving talks appeared to nix earlier hopes that at least an outline for a deal could be in place before the financial markets opened Monday, as some senior senators suggested when momentum seemed to be building toward a plan by Sen. Susan Collins (R-Maine). 
 
 Senate Republicans — already stunned by Boehner’s inability to pass anything in the House — grew furious about Reid’s attempt to get relief from the sequester because they considered Collins’s plan the fastest path to a deal. 
 
 “This thing has gotten to the point of a real crisis for the country, and everybody keeps changing their position based on politics,” Sen. Lindsey O. Graham (S.C.) said after a long huddle on the Senate floor with McConnell and other Republicans. 
 
 It was a dramatic turnabout from Thursday morning, when Boehner’s leadership team signaled that it would support increasing the debt ceiling until almost Thanksgiving with the only demand being that Obama negotiate over a broader budget framework in the interim. With pressure on the debt issue appearing to ease, financial markets staged their biggest rally in a month. 
 
 The president, however, rejected Boehner’s offer because it did not address reopening the government, which has been closed since Oct. 1. Instead, the White House grew interested in the Senate talks over Collins’s plan because of its longer debt-ceiling window. According to the administration, Treasury Secretary Jack Lew will run out of options after Thursday for juggling the nation’s books, and by the end of the month, the Treasury will run out of cash to pay the government’s bills. 
 
 Collins, along with GOP Sens. Kelly Ayotte (N.H.) and Lisa Murkowski (Alaska), worked with Democrats to draw up a 23-page draft that would have ended the shutdown and funded federal agencies for six months at current spending levels. It would have left intact the sequestration cuts scheduled to hit Jan. 15 but would have given agency officials flexibility to decide where the reductions should occur. 
 
 In addition, the proposal would raise the debt limit through Jan. 31, setting up a path for the two sides to have broad budget talks to try to tackle the issues of taxes and entitlement reform. 
 
 In exchange, Republicans sought tweaks to Obama’s Affordable Care Act, including a two-year delay of a 2.3 percent tax on medical devices that is unpopular in both parties. 
 
 Reid and McConnell met with two allies who had been working with Collins — Sens. Charles E. Schumer (D-N.Y.) and Lamar Alexander (R-Tenn.) — when Reid rejected that plan but the talks continued. 
 
 Democrats want a shorter extension of government funding so that they can try to press the Republicans, whose party’s image has been battered in recent weeks, for more savings from the sequestration cuts in negotiations that would take place in the near term — rather than waiting until March, when the spending cuts will have taken effect. 
 
 In addition, Reid told reporters that he will make no concessions on the health-care law. 
 
 The Reid-McConnell negotiations will test a relationship that has been deeply frayed in the past three years, when McConnell has served as a key closer on several fiscal deals but has done so by going around Reid to Vice President Biden. 
 
 Rather than focusing on the acrimonious days, however, Reid recalled their bipartisan work together nine years ago to revamp the Senate’s oversight of national security agencies. But he warned that a deal will take time. 
 
 “We don’t have anything done yet, and a long ways to go before anything like that will happen,” he said. 
 
 If an agreement were reached, time would become a factor. Unless every senator agreed to expedite the process — including conservative firebrands such as Ted Cruz (R-Tex.) and Mike Lee (R-Utah) — it would take until at least late in the week to clear the Senate. 
 
 The bill would then go to the House, where it would face an uncertain fate. 
 
 Boehner’s closest friends in the Senate, including Graham and Sen. Saxby Chambliss (R-Ga.), pleaded with him Friday to modify his legislation along the lines of what they were trying to broker across the Capitol. The speaker told them Saturday that the Collins plan would face opposition from too many Republicans for him to put it on the floor, Chambliss said. 
 
 “We don’t support it,” House Budget Committee Chairman Paul Ryan (R-Wis.) told reporters, saying that the reasons for opposition were “too many to go into.” 
 
 In a raucous meeting in the Capitol basement Saturday morning, Boehner told his Republican colleagues that talks between the House GOP and Obama had broken down. He and House Majority Leader Eric Cantor (R-Va.) urged members to hold firm, several said, as McConnell and Reid worked on a deal. 
 
 “All eyes are now on the Senate,” said Rep. Adam Kinzinger (R-Ill.). 
 
 The leaders, however, began the meeting trying to prepare their troops for the likelihood that they would have to adopt a deal cut in the Senate. Both leaders explained that the White House is no longer willing to negotiate with the House, that McConnell and Reid were talking, and that a bipartisan agreement is likely to emerge that will need the House’s approval. 
 
 But instead of absorbing this painful reality, some rank-and-file Republicans grew visibly excited about the prospect of opposing such a deal, said one person in the room. This defiance was fed by Ryan, who stood up and railed against the Collins proposal, saying the House could not accept either a debt-limit bill or a government-funding measure that would delay the next fight until the new year. 
 
 According to two Republicans familiar with the exchange, Ryan argued that the House would need those deadlines as “leverage” for delaying the health-care law’s individual mandate and adding a “conscience clause” — allowing employers and insurers to opt out of birth-control coverage if they find it objectionable on moral or religious grounds — and mentioned tax and entitlement goals Ryan had focused on in a recent op-ed in the Wall Street Journal. 
 
 Ryan’s speech appeared only to further rile up the conservative wing of the GOP conference, which has been agitating the shutdown strategy to try to tear apart the health-care law. 
 
 With such fervor still rampant among House Republicans, there was bipartisan agreement in the Senate that Boehner’s House had lost its ability to approve anything that could be signed by Obama into law. Republicans decided the Senate must act first, hoping that the pressure of the Thursday debt deadline would lead to the House passing the measure even if it meant just a small collection of the GOP’s House majority joined with the Democratic minority to approve a deal. 
 
 “At this point, they have dealt themselves out of this process. They cannot agree among themselves,” Durbin said. “And that makes it extremely difficult to take them seriously.” 
 
 Rosalind S. Helderman, Jackie Kucinich and Jeff Simon contributed to this report. ||||| WASHINGTON U.S. senators said they were closing in on a deal Monday that would reopen the government and push back a possible default for several months, though many hurdles remained as a Thursday deadline drew near. 
 
 The Senate's top Democrat and top Republican both said they hoped they could soon reach an agreement that would allow them to avert a looming default and end a partial government shutdown that has dragged on for 14 days so far. 
 
 "I'm very optimistic that we that we will reach an agreement that's reasonable in nature this week," Senate Democratic Leader Harry Reid said on the Senate floor. 
 
 Lawmakers are racing against the clock, with U.S. officials estimating that the federal government could run out of borrowing capacity on October 17. 
 
 The plan under discussion would raise the $16.7 trillion debt ceiling by enough to cover the nation's borrowing needs at least through mid-February 2014, according to a source familiar with the negotiations. 
 
 It also would fund government operations through the middle of January, keeping in place the across-the-board "sequester" spending cuts that took effect in March, though government agencies would have more latitude to ease their impact. It would also set up a new round of budget talks that would try to strike a bargain by year's end. 
 
 Any deal would also have to win approval in the House of Representatives, where conservative Republicans have insisted that any continued government funding must include measures to undercut President Barack Obama's signature health law - a nonstarter for Democrats. 
 
 The deal would not resolve the disagreements over long-term spending and health care that led to the crisis in the first place. It would amount to a clear retreat for Republicans who have sought to tie any continued funding and borrowing authority to measures that would undercut Obama's Affordable Care Act. 
 
 Republicans have taken a hit in opinion polls since the standoff began and some in the party worry it could hurt their chances to win control of the Senate in next year's midterm elections. 
 
 A Washington Post/ABC News poll released on Monday found that 74 percent of Americans disapprove of the way congressional Republicans have handled the standoff, compared with a 53 percent disapproval rating for Obama. 
 
 Senate Republican Leader Mitch McConnell of Kentucky echoed Reid's comments that a deal could come together soon. 
 
 "I share his optimism that we we're going to get a result that will be acceptable to both sides," he said on the Senate floor. 
 
 The White House postponed a planned 3 p.m. (1900 GMT) meeting with congressional leaders in order to give negotiators more time to work out a deal. 
 
 The Treasury Department says it cannot guarantee that the U.S. government will be able to pay its bills past October 17 if Congress does not raise the debt ceiling by then. 
 
 A default would likely come by November 1 as Treasury would not have enough tax revenue coming in to cover interest payments, retirement benefits and other obligations. 
 
 WEIGHING ON THE ECONOMY 
 
 It is unclear whether Congress can meet that October 17 deadline. Even if Republicans and Democrats in the Senate reach agreement on Monday, hard-liners such as Texas Republican Senator Ted Cruz might be able to exploit Senate rules to delay a vote for several days. 
 
 House Speaker John Boehner also could face an insurrection that could threaten his position as Washington's top Republican if he tries to advance a bill over the objections of rank-and-file conservatives in that chamber. 
 
 "If the Senate comes to an agreement, we'll review it with our members," Boehner spokesman Kevin Smith said. 
 
 Though Treasury likely will have enough cash on hand to meet its obligations for a week or so, it might be forced to pay a higher interest rate on debt it is due to issue on Thursday. 
 
 Banks and money market funds are already shunning some government securities that are often used as collateral for short-term loans and to facilitate many other transactions. In China, the largest foreign holder of U.S. debt, the state news agency Xinhua said it was time for a "de-Americanized world." 
 
 Though some Republicans have argued that the government could avoid serious consequences by prioritizing interest payments over other types of spending, that view is not widely held by the public. 
 
 A Reuters/IPSOS poll released on Tuesday found that only 25 percent believe the debt ceiling issue is "overblown." 
 
 U.S. stocks were buoyed by prospects of a deal. The S&P; 500 Index closed up 0.41 percent while the Nasdaq Composite Index ended 0.62 percent higher. 
 
 The government shutdown, now in its 14th day, is beginning to weigh on the economy. The hundreds of thousands of federal employees who have been temporarily thrown out of work are likely to get back-pay when the standoff is resolved. But they aren't getting paid now, forcing many to dial back on personal spending and cancel holiday travel plans. 
 
 The crisis is only the latest in a series of budget battles in recent years that have repeatedly spooked investors and consumers. The uncertainty has weighed on the economy and boosted the unemployment rate by 0.6 of a percentage point, or the equivalent of 900,000 jobs since late 2009, according to a new estimate by the Peter G. Peterson Foundation, a think tank. 
 
 Foreign leaders and business executives have urged Washington to resolve the crisis before it does further damage. 
 
 "This is all bad for America, bad for the economy, bad for job growth, bad for consumer confidence, and the quicker we get it resolved, the better," Terry Lundgren, chief executive of retailer Macy's Inc, told Reuters. 
 
 Republicans in the Senate are pushing to include slight modifications to the Affordable Care Act. One would toughen income verification for those seeking health insurance subsidies under the law. Another could delay a reinsurance fee included in the law that otherwise would start in 2014, according to a labor-union source. 
 
 Throughout the shutdown, Obama has said Republicans must agree to reopen the government and extend the debt ceiling before the two sides can begin talks on spending or tweaks to his Affordable Care Act. 
 
 That position has not changed. 
 
 "We will not pay a ransom for Congress reopening the government and raising the debt limit," the White House said in a statement on Monday morning. 
 
 (Additional reporting by Roberta Rampton, Tim Reid, David Lawder, Amanda Becker, Lisa Lambert and Susan Heavey and Steve Holland in Washington and Phil Wahba in New York; Writing by Andy Sullivan; Editing by Karey Van Hall, Claudia Parsons and Tim Dobbyn)
– As the government shutdown enters its third week, Senate leaders appear to be waiting for world financial markets to give them a jolt before they make a deal, the Washington Post reports. Harry Reid and Mitch McConnell had a conversation yesterday that Reid says left him "optimistic about the prospects for a positive conclusion." But there's no indication of what a compromise might look like, and Democrats are now pushing for a deal that would lift the sequester budget cuts, showing what the New York Times calls a "newfound aggressiveness." The sequester demand has Republicans frustrated. "The Democrats keep moving the goal posts," complains Sen. Susan Collins, the centrist GOP senator whose plan to resolve the crisis was rejected. Bob Corker agreed, saying of lifting the cuts, "I just can't imagine how that has any possibility of becoming law." The Post worries that the increasingly bitter McConnell-Reid feud could deep-six the deal. Things have gotten so bad that their colleagues recently held "the equivalent of an intervention," the paper says. World Bank and International Monetary Fund leaders urged the US to hurry up and forge a deal, with IMF director Christine Lagarde warning that "massive disruption the world over" looms. A foreign ministry spokesman in China called for American lawmakers to "shoulder their responsibilities," Reuters reports, and a scathing editorial in China's Xinhua state news agency called for politicians to end the "pernicious impasse"—and for everybody else to "start considering building a de-Americanized world." Claims that America has never defaulted on its debt are part of every debt-limit battle but the US has stiffed its creditors at least twice, the AP finds. In 1814, the government ran out of gold and silver to pay interest to bondholders in New England after setbacks in the War of 1812, and in 1979, a technical glitch that followed a long debt-limit squabble caused a delay in redeeming maturing T-bills that ended up adding about $12 billion to the cost of servicing the national debt.