WASHINGTON - Democratic US Senate Majority Leader Harry Reid announced late Saturday that White House talks on averting a disastrous US debt default had made strides towards a compromise with just days to act.
"There are negotiations going on at the White House to avert a catastrophic default on the nation's debt. There are many elements to be finalized and there is still a distance to go," he said.
With a midnight Tuesday deadline closing in, Reid said that he was putting off to 1:00 pm (1700 GMT) a procedural vote on his plan to raise the $14.3 trillion US debt limit -- a bill Republicans had vowed to kill.
"I spoke to the White House quite a few times this evening, and they've asked me to give everyone as much time as possible to reach an agreement if one can be reached," said the lawmaker, a close ally of President Barack Obama.
"I'm glad to see this move toward cooperation and compromise. I hope that it bears fruit," said Reid, who said he was "confident" that a final deal would embrace a long-term increase in the US debt ceiling.
Details of the burgeoning accord were still being negotiated, but an aide familiar with the talks said it called for offsetting any debt ceiling increase by matching spending cuts.
According to the aide who spoke on condition of anonymity, under the proposal, the debt ceiling would be increased up to $2.8 trillion, with $1 trillion of spending cuts taking effect immediately.
A special bipartisan committee would be set up to recommend cuts of the remaining $1.8 trillion.
The panel must make its recommendations before Thanksgiving recess in November, the aide said. Failure by Congress to approve them by late December would trigger automatic across-the-board cuts, including in defense and the Medicare health program for the seniors.
The US economy hit that limit on May 16 and has used spending and accounting adjustments, as well as higher-than-expected tax receipts, to continue operating normally -- but can only do so through August 2.
Business and finance leaders have warned that default would send crippling aftershocks through the fragile US economy, still wrestling with stubbornly high unemployment of 9.2 percent in the wake of the 2008 global meltdown.
Absent a deal, the US government will have to cut an estimated 40 cents out of every dollar it spends, forcing grim choices between defaulting on its debt or cutting back on programs like those that help the poor, disabled and elderly.