The Free Press, Mankato, MN

State, national news

October 14, 2013

Reid, McConnell optimistic on debt-shutdown deal

(Continued)

There was no certainty that the growing anxiety among financial leaders around the world would provide the necessary jolt to Senate leaders, who represent the last, best chance for a resolution after talks between President Barack Obama and House Republican leaders collapsed.

Sen. Joe Manchin, D-W.Va., said Monday that investors are growing increasingly "skittish" about the possibility of default. The bond markets were closed for Columbus Day, and by mid-morning the stock market was down modestly, with both the Dow Jones industrial average and Standard & Poor's 500 index losing less than 1 percent. Trading in Asia was muted, with markets in Tokyo and Hong Kong closed for holidays.

The shutdown has furloughed 350,000 federal workers, impeded various government services, put continued operations of the federal courts in doubt and stopped the IRS from processing tax refunds. Some parks and monuments remain closed, drawing a protest at the National World War II Memorial on Sunday that included tea party-backed lawmakers who had unsuccessfully demanded defunding of Obama's 3-year-old health care law in exchange for keeping the government open.

Economists see greater financial danger from an historical default. Christine Lagarde, the International Monetary Fund's managing director, spoke fearfully about the disruption and uncertainty, warning on Sunday of a "risk of tipping, yet again, into recession" after the fitful recovery from 2008.

Reid and McConnell — five-term senators hardened by budget disputes and years of negotiations — are at an impasse over the automatic, across-the-board spending cuts known as sequestration and whether to undo or change them as part of a budget deal. Republicans want to keep the spending at the deficit-cutting level of the 2011 budget law while Democrats are pressing for a higher amount.

"I'm optimistic about the prospects for a positive conclusion to the issues before this country today," Reid said as the Senate wrapped up a rare Sunday session.

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