Senate leaders restart debt, budget talks

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Reid, McConnell optimistic after House vote falls apart

WASHINGTON (MarketWatch) ? Senate leaders restarted talks on Tuesday night to reopen the government and lift the U.S. debt ceiling after House Republicans? plans to vote on their own proposal fell apart.

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House Speaker John Boehner (C)

Spokesmen for Senate Majority Leader Harry Reid, a Nevada Democrat, and Minority Leader Mitch McConnell, a Kentucky Republican, said their talks had resumed.

?Senator Reid and Senator McConnell have re-engaged in negotiations and are optimistic that an agreement is within reach,? Reid spokesman Adam Jentleson said on Twitter.

McConnell spokesman Don Stewart offered a similarly worded statement, saying: ?Given tonight?s events, the [Senate] leaders have decided to work toward a solution that would reopen the government and prevent default. They are optimistic an agreement can be reached.?

The abrupt decision to cancel voting on the House plan was a clear sign Republicans didn?t have the votes to approve the bill, which would have opened the government through Dec. 15. The debt limit would have been extended to Feb. 7.

A plan discussed earlier by Reid and McConnell would have extended the debt limit for the same amount time, but would fund the government until Jan. 15.

The House?s rules committee postponed a meeting on the bill shortly after Heritage Action, a conservative group, said it opposed the bill because it didn?t stop ?Obamacare?s massive new entitlements.?

Adding to the drama in Washington, Fitch Ratings Service put the U.S. credit rating on negative watch. Reid had warned Tuesday morning that credit-rating agencies could downgrade U.S. debt ?as soon as tonight? without action to raise the debt limit.

Tuesday morning, House Speaker John Boehner told reporters that Republican leaders were ?working with our members on a way forward.? But by the end of the day, it became clear that deal-making was shifting back to the Senate.

scrambling to solve the twin impasses. The government shutdown is on Day 15, and the Treasury?s Thursday deadline for raising the borrowing limit is rapidly approaching.

?Extremist Republicans in the House are attempting to torpedo the Senate?s bipartisan progress,? Reid said on the Senate floor Tuesday. He said he was ?blind-sided? by the House proposal.

U.S. stocks dropped Tuesday, with the Dow Jones Industrial Average /quotes/zigman/627449 DJIA -0.87%   ending 134 points in the red, as investors waited for a deal from Washington. (Read Market Snapshot.)

World Markets

North and South American Indexes

	Index	Country	Change	% Change	Level	Last Update
	Dow Jones Industrial Average	United States	-133.25	-0.87%	15,168.01	4:30pm ET
	S& P 500 Index	United States	-12.08	-0.71%	1,698.06	4:30pm ET
	Brazil Bovespa Stock Index	Brazil	+810.04	+1.50%	54,980.64	4:16pm ET
	Canada S& P/TSX 60	Canada	+2.30	+0.31%	743.63	4:20pm ET
	Santiago Index IPSA	Chile	+7.04	+0.22%	3,271.30	3:16pm ET
	IPC	Mexico	-663.77	-1.62%	40,218.32	4:06pm ET

How the US shutdown can affect S'pore

http://news.asiaone.com/news/singapore/how-us-shutdown-can-affect-spore

The Five Scenarios Of A Debt Ceiling Breach

As McKee  notes, it seems a growing number expect us to cross the red line and for the " market" to save the day... i.e. we see a major market crash on the 18th which finally sparks DC to action

http://www.youtube.com/watch?v=_ibPqcHgGAw

14 Oct 2013 - 9:10. Monday. US senators hint at possible fiscal deal on Tuesday

http://www.cnbc.com/id/101102553

Plan under discussion would promptly end a partial govt shutdown about to enter its 3rd wk. To raise debt ceiling, enough to cover the nation's borrowing needs at least through mid-Feb 2014, according to a source familiar with the negotiations.

Govt operations would be funded through the middle of January, keeping in place the across-the-board " sequester" spending cuts that took effect in March, though govt agencies would have more latitude to ease their impact. Also set up a new round of budget talks that would try to strike a bargain by year's end.

(Read more: Senate leaders closing in on a deal: Senate Democrat)