Senate Leaders Confirm Deal To Avert Default

Senate leaders have reached a last-minute agreement to avert a threatened US default and reopen the government.

Senate Majority Leader Harry Reid announced on Wednesday that a bipartisan deal had been struck to end the fiscal impasse.

Speaking on the Senate floor after more than two weeks of political wrangling, Mr Reid said: "This is a time for reconciliation." 

Earlier, Republican Senator Kelly Ayotte said congressional leaders would push for passage as soon as possible.

The deal, struck by Mr Reid and GOP Leader Mitch McConnell, calls for the Treasury to have authority to continue borrowing through February 7, and reopen the government through January 15.

Sen Ayotte said she understood the legislation would first receive a vote in the Republican-controlled House, an arrangement that would speed its way through Congress to President Barack Obama's desk.

House Speaker John Boehner has failed to rally Republicans behind a deal

The White House expressed optimism that the bipartisan plan would gain passage and urged Congress to act quickly.

As word of the Senate deal emerged, Speaker John Boehner and the House Republican leadership met to plan their next move.

Notably absent from the pending agreement is a long-held Republican demand to defund aspects of Mr Obama's signature health care law.

The Senate deal makes only one modest change in the programme that requires individuals and families seeking subsidies to verify their incomes before qualifying.

Senator Ted Cruz, a Tea Party favourite who has been a staunch opponent of any deal that did not include cuts to "Obamacare", said he would vote against the measure but would not pursue delaying tactics to stall the legislation.

The president's health care law is at the heart of the dispute

Speaking to reporters ahead of the Senate's announcement, Mr Cruz said: "Once again the Washington establishment is refusing to listen to the American people."

A top Democratic aide told Reuters the deal appears certain to be approved with mostly Democratic votes.

The New York Stock Exchange soared on the news that the threat of default was easing in, rising roughly 200 points by late morning.

With borrowing authority set to run out on Thursday, leaders worked through the night to craft an agreement that could win bipartisan support in the deeply polarised Congress.

Mr Obama has warned of the consequences of a default and leading economists have said it could hurt the global economy.

Warren Buffett, one of the the world's most influential investors, said the threat not to raise the debt limit is a "political weapon of mass destruction" comparable to poison gas.

Mr Buffett, who leads the Berkshire Hathaway conglomerate, told CNBC that he does not think the federal government will fail to pay its bills.

"If it does happen, it's a pure act of idiocy," he added.

Uncertainty over Washington's ability to avert a default led Fitch Ratings to warn it could cut the sovereign credit rating of the United States from AAA, citing the political brinkmanship on Capitol Hill.

The renewed push in the Senate came after a day of chaotic developments in the House that saw two separate GOP plans buried when it became apparent they failed to rally enough support among Republican rank-and-file.

Politically, neither party is faring well, but polls indicate Republicans are bearing the brunt of public unhappiness as survey after survey shows their approval ratings plunging.

A Washington Post/ABC News poll released on Monday found that 74% of Americans disapprove of the way congressional Republicans have handled the standoff, compared with a 53% disapproval rating for Obama.

The shutdown has already furloughed hundreds of thousands of federal workers and forced national parks and monuments to close down in high season.

Some tourist attractions such as the Grand Canyon and the Statue of Liberty have now reopened, as states agreed to fund their running.

However, many communities have lamented the economic damage they have had to incur.

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