Reid "very optimistic" he and McConnell can reach a deal on shutdown, debt ceiling

Updated at 5:14 p.m. ET

Senate leaders have grown more and more optimistic about the prospects of a deal to reopen the government and avert a default on the U.S. debt during the course of Monday. As the Senate came into session early in the afternoon, Senate Majority Leader Harry Reid, D-Nev., said he was "very optimistic" that Democrats and Republicans would negotiate an agreement this week after "constructive, good-faith negotiations" with Minority Leader Mitch McConnell.

McConnell, in turn, said he shared Reid's optimism after having the opportunity for "some very constructive exchange of views."

The two leaders met twice in McConnell's office Monday ahead of a meeting between congressional leaders and President Obama. The meeting was scheduled for 3 p.m. but the White House announced shortly before then that it had been postponed "to allow leaders in the Senate time to continue making important progress towards a solution that raises the debt limit and reopens the government." Reid told reporters earlier in the day that he hoped to have something to take with him to the White House in the afternoon.

McConnell will huddle with Senate Republicans tomorrow in order to allow time for all members to return to Washington.

A senior Senate aide said the plan being discussed would fund the government through Jan. 15 and raise the debt limit through Feb. 15. Other sources said that on Dec. 15, budget negotiators would be required to offer a legislative solution to replace the spending cuts mandated by the sequester.

Democratic and Republican aides also told CBS News that the deal would not include a repeal or delay of the medical device tax, a provision of the Affordable Care Act that is unpopular with both parties. It could come up again during larger budget talks, though.

Earlier in the day, Mr. Obama traveled to Martha's Table, a food pantry located north of the White House, where he visited federal workers who are volunteering while they are furloughed from their jobs.

"I think that shows the kind of spirit we have among all kinds of federal workers across the country," Mr. Obama said.

He urged Congress again to end what he said is the "completely unnecessary" shutdown of the federal government and the threat of default. He sounded optimistic about the meetings in the Senate.

"We'll see this afternoon whether this progress is real," Mr. Obama said. "My hope is a spirit of cooperation will continue to move us forward during the next few hours."

With just a few days left for Congress to raise the debt limit before the nation's borrowing authority runs out, the president "will make clear the need for Congress to act to pay our bills, and reopen the government," according to the White House. "The President will also reiterate our principles to the leaders: we will not pay a ransom for Congress reopening the government and raising the debt limit."

CBS News' Nancy Cordes reports that talks between Mr. Obama and House Republicans on both issues have completely stalled, leaving Senate Majority Leader Harry Reid, D-Nev., and Senate Minority Leader Mitch McConnell, R-Ky., in slow-moving negotiations.

They're arguing primarily over timing. Democrats want a shorter government funding bill that would reopen federal operations for just six weeks rather than six months. They also want a longer debt limit increase, extending the nation's borrowing authority for about six months rather than just three and a half.

It may seem counter-intuitive that Democrats would want to fund the government for less time than Republicans, but this is all about the sequester: the second year of sequester cuts is set to go into effect in January, and Democrats desperately want to try to roll back some of those cuts. They worry that if they agree to fund the government at sequester levels through March, those levels will be locked in and they will lose any opportunity to negotiate over slowing or replacing the cuts.

Republicans, who have been looking for a way to shift the negative publicity off themselves, accused Democrats over the weekend of "getting greedy." Sen. John McCain, R-Ariz., said on "Face the Nation" that Democrats had been emboldened by poll numbers showing the GOP bearing the brunt of blame for the crisis, and had therefore decided to stiffen their negotiating posture at the last minute.

"I'm disappointed that twice they were close to a deal and the Democrats moved the goalpost in light of the polling data," he said.

Sen. Bob Corker, R-Tenn., said that while Republicans entered the shutdown debate with unreasonable demands to scuttle key portions of Obamacare, it is now Democrats who are guilty of bargaining too aggressively.

"Republicans started off in a place that was an overreach, to defund a law that was central to the president's agenda was not achievable," he said on "Fox News Sunday." "Now Democrats are I think getting too cute. They now are overreaching."

Senate Republicans thought McConnell and Reid were close to a deal Saturday morning, before Democrats brought the sequester into it - and they warn there is no way that House Republicans are going to go along with a bill that not only includes no concessions to the GOP, but which aims to raise spending rather than cut it.

The plan put forward by Sen. Susan Collins, R-Maine, which has drawn some interest from a handful of moderate Democrats, is still percolating in the background. That plan would raise the debt ceiling through January and reopen the government for six months in exchange for a two-year delay of the tax on medical devices levied by Obamacare.

Over the weekend, McConnell expressed his support for the Collins plan (and said nothing about his talks with Reid -- those two don't get along very well). However, Senate Democratic leaders pushed their moderate members to put out a statement saying they don't approve of the Collins plan in its current form. Democratic leaders don't like the fact that it funds the government at sequester levels through March and makes a few minor changes to Obamacare. They feel that the Collins plan asks more of Democrats than it does of Republicans.

Still, the Collins bill is already drafted into legislative language and could end up being the vehicle for a deal if the markets go crazy and lawmakers give in to the pressure to reach a deal.

Of course, whatever the Senate agrees to then has to be put up for a vote -- a process that could take days unless all 100 senators agree to speed up the clock. Furthermore, no one can say for certain what the House Republicans will do with the bill.

House Republicans may introduce yet another debt ceiling proposal early this week, but their tentative plan includes a few provisions that are total non-starters with Democrats -- like a new rule that would impose spending cuts any time Congress fails to fund the government in time.

There is an odd mix of fear and hope about a stock market slide today. Lawmakers know they are tempting a big drop with their non-action, but they also think that a drop could be what it takes to finally force everyone to drop unrealistic demands and quickly craft a plan to raise the debt ceiling.

  • CBS News Staff

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