The Clinton Herald, Clinton, Iowa

AP story section

October 16, 2013

Senators seek deal, House effort flops

WASHINGTON (AP) — Senate leaders are optimistic about forging an eleventh-hour bipartisan deal preventing a possible federal default and ending the partial government shutdown after Republican divisions forced GOP leaders to drop efforts to ram their own version through the House.

Pressured by the calendar, financial markets and public opinion polls, Senate Majority Leader Harry Reid, D-Nev., and Minority Leader Mitch McConnell, R-Ky., were hoping to shake hands on an agreement today and, if possible, hold votes later in the day.

Driving their urgency were oft-repeated Obama administration warnings that the government would exhaust its borrowing authority Thursday and risk a federal default that could unhinge the world economy. Lawmakers feared that spooked financial markets would plunge unless a deal was at hand and that voters would take it out on incumbents in next year’s congressional elections.

“People are so tired of this,” President Barack Obama said Tuesday in an interview with Los Angeles TV station KMEX.

Feeding concerns were a warning Tuesday from the Fitch credit rating agency that due to the budget impasse it was reviewing its AAA rating on U.S. government debt for possible downgrade. Stock markets gave negative reviews as well, with the Dow Jones industrial average and Standard & Poor’s 500 index both dropping Tuesday by nearly 1 percent.

John Chambers, chairman of Standard & Poor’s Sovereign Debt Committee, told “CBS This Morning” today that a U.S. government default on its debts would be “much worse than Lehman Brothers,” the investment firm whose 2008 collapse led to the global financial crisis.

Billionaire investor Warren Buffett told CNBC he doesn’t think the federal government will fail to pay its bills, but “if it does happen, it’s a pure act of idiocy.”

Rep. Steve King, R-Iowa, a tea party favorite, said he was not worried about the prospect of a U.S. default.

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