White House, GOP reach for showdown-ending pact

Updated: 12:58 p.m. ET

WASHINGTON - White House officials and congressional Republicans are "very close" to a potential end to their bitter debt limit showdown, Sen. Minority Leader Mitch McConnell said Sunday morning, raising hopes that a deal could be in place by Tuesday to avert a possible federal default.

After weeks of strident partisan conflict, McConnell said the two sides were making "dramatic progress" in talks over an agreement that would raise the government's borrowing authority in two steps by about $2.4 trillion and cut federal spending by slightly more, according to knowledgeable officials.

"We've come a long way," McConnell, R-Ky., said Sunday on CBS' "Face the Nation."

"I believe there will be a strong bipartisan support for this... Again, this deal has not been finalized yet, but I think we're very, very close to something that I could comfortably recommend to my members, and I believe the Democratic leadership will be doing the same."

Sen. Charles Schumer, D-N.Y., noted on the same program, however, that a final deal has yet to be solidified. "

Nothing is done yet," he said. "There are hundreds of details here, and all of them have to be worked through and obviously it's got to be done very quickly to avoid default, which is the nightmare for everybody."

Still, Schumer said he felt "a lot better today about the ability to avoid default than I did even yesterday morning."

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The plan was described to CBS News as being similar to House Speaker John Boehner's plan approved along party lines in the lower chamber Friday night and quickly rejected in the Democratic-held Senate, with a modified trigger of spending cuts if a proposed joint committee negotiating the cuts deadlocks.

Congress would also have to vote on a constitutional amendment requiring a balanced federal budget, a top-flight GOP goal. Unlike the bill approved Friday by the Republican-run House, none of the debt limit increase would be tied to congressional approval of that amendment.

Details of a possible accord began emerging Saturday night after Senate Majority Leader Harry Reid, R-Nev., said on the Senate floor that the two sides were trying to nail down loose ends and complete an agreement.

"I'm glad to see this move toward cooperation and compromise, and hope it bears fruit," he said.

A Democratic official said that while bargainers were not on the cusp of a deal, one could gel quickly. A Republican said there was consensus on general concepts but cautioned there were no guarantees of a final handshake. Both spoke on condition of anonymity to reveal details of confidential talks.

Any pact would have to quickly pass both chambers of Congress after a rancorous period that has seen the two parties repeatedly belittle each other's efforts to end the standoff.

Even so, the deal under discussion offers wins for both sides. Republicans and their tea party supporters would get spending cuts at least as large as the amount the debt ceiling would grow and avoid any tax increases. For President Obama and Democrats, there would be no renewed battle over extending the borrowing limit until after next year's elections.

Under the possible compromise, the debt limit would rise by an initial $1 trillion.

A second, $1.4 trillion increase would be tied to a specially created congressional committee that would have to suggest deficit cuts of a slightly larger amount. If that panel did not act -- or if Congress rejected their recommendations -- automatic spending cuts would be triggered that could affect Medicare and defense spending, two of the most politically sacrosanct programs.

Mr. Obama and Democrats have been insisting on a one-shot debt ceiling increase of around $2.4 trillion, enough to last until 2013. Bowing to GOP pressure, they eventually agreed to include an equal amount of spending cuts and dropped their earlier bid for tax increases.

In the bill the House approved Friday -- and the Senate rejected -- Republicans would initially extend federal borrowing authority by $900 billion, accompanied by $917 billion in spending cuts. They would tie a second $1.6 trillion debt limit boost to spending cuts of up to $1.8 trillion and approval of the balanced budget amendment.

The government has exhausted its $14.3 trillion borrowing limit and has paid its bills since May with money freed up by accounting maneuvers.

The Treasury Department has said it will run out of available cash on Tuesday. The administration has warned that an economy-shaking default would follow that could balloon interest rates and wound the world economy.