* Senate plan would extend borrowing authority to Feb. 7
* Treasury says government hits debt limit on Thursday
* Two plans by House Republicans collapse amid opposition
* Fitch Ratings warns it could cut U.S. credit rating
By Richard Cowan and Amanda Becker
WASHINGTON, Oct 15 With the United States just a
day away from exhausting its ability to borrow money, U.S.
Senate leaders were still discussing a deal late on Tuesday
aimed at raising the debt limit and reopening federal agencies
that have been closed for two weeks.
Senate aides said a deal was close but details remained to
be worked out, and earlier hopes that a deal could be announced
late on Tuesday were not met.
The U.S. Treasury says the government will bump up against
its $16.7 trillion borrowing limit on Thursday, leaving little
room for error and raising the risk the government will fail to
pay its bills and creditors.
Even once a deal is reached, it must clear the full Senate
and possible procedural snags in that chamber on Wednesday
before moving to the fractious House of Representatives that was
unable to produce its own deal on Tuesday.
Amid the chaos, Fitch Ratings warned it could cut the
sovereign credit rating of the United States from AAA, citing
the political brinkmanship over raising the federal debt
Senate Majority Leader Harry Reid and Republican leader
Senator Mitch McConnell were discussing ways of avoiding
procedural hurdles that could slow down the measure, Democratic
Senator Heidi Heitkamp told CNN late Wednesday.
"This is now back on track," she said, its fate dependent on
"whether the House and Senate play well together."
As previously outlined, the Senate deal under discussion
would extend U.S. borrowing authority until Feb. 7, although the
Treasury Department would have tools to temporarily extend its
borrowing capacity beyond that date if Congress failed to act
early next year.
The bill also would fund government agencies until Jan. 15,
ending a partial government shutdown that began with the new
fiscal year on Oct. 1.
It was another roller-coaster day of fiscal negotiations in
Congress that saw two separate legislative efforts by the House
die before they could even be debated by the full chamber. The
measures were buried after it became apparent that too many
Republicans were rebelling against their leaders' bills.
Aides said Reid and McConnell were looking at two possible
ways of speeding the legislation through the Senate, which often
can get bogged down for several days with procedural hurdles.
If such delays were allowed, they could throw the U.S. into
default by making passage of a bill impossible by Thursday.
Under one scenario, all 100 senators would agree to let
Democrats schedule quick votes to pass the bill. That would mean
that Tea Party faction firebrands, such as Republican Senator
Ted Cruz, would give up their rights to delay a vote.
Cruz has not publicly announced his intentions but some
Senate aides think that the Texas freshman with presidential
aspirations has been sending positive signals in recent days.
Cruz and fellow Tea Party activists late last month delayed
passage of a government funding bill as they demanded major
changes to Obama's landmark healthcare law.
The deadlock led to federal agency shutdowns as Obama and
his fellow Democrats stood firm against changing the law.
The other scenario would have the House send a formal
"message" to the Senate to pave the way for quick Senate action,
according to a Senate aide who asked not to be identified.
Again, it was not clear whether House Republicans would go
along with that option.
BOEHNER'S TOUGH DECISION
Either way, House Speaker John Boehner will have to decide
whether to allow passage of a bill that many of his fellow
Republicans might oppose, a decision that could impact the top
Republican's political future.
House Republicans twice tried to come up with a new
compromise but failed to satisfy Obama, Senate Democrats or Tea
The first House Republican attempt was shot down in a
closed-door meeting that had begun with members singing the hymn
The second plan was scuttled hours before it was expected to
hit the House floor for a vote after the influential Heritage
Action for America, a conservative group, urged a "no" vote
because it did not do enough to stop Obama's healthcare law.
If Congress fails to reach a deal by Thursday, checks would
likely go out on time for a short while for everyone from
bondholders to workers who are owed unemployment benefits. But
analysts warn that a default on government obligations could
quickly follow, potentially causing the U.S. financial sector to
freeze up and threatening the global economy.
The U.S. Treasury Department seized on Fitch's downgrade
threat to press Congress. "The announcement reflects the urgency
with which Congress should act to remove the threat of default
hanging over the economy," a Treasury spokesperson said.
Numerous polls show Republicans have taken a hit in opinion
polls since the standoff began and the government shutdown. 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.