Senate Majority Leader Harry Reid on Monday vowed to keep senators in Washington until lawmakers from both parties cut a deal to raise the legal amount the U.S. can borrow and possibly reduce the deficit over time.
The Nevada Democrat, who controls when the Senate is in session, is working with Senate Republican Leader Mitch McConnell on a backup plan to avoid economic catastrophe on August 2, when the U.S. runs out of options to avoid defaulting on its debt obligations if the $14.3 trillion debt ceiling is not raised.
A version of the Kentucky lawmaker's proposal to raise the U.S. borrowing limit in exchange for a trio of politically unpopular votes on the government's spending limit between now and Election Day 2012 appears increasingly likely to form the basis of a deal.
Meanwhile, the House of Representatives this week plans to vote on its own more conservative proposal, though it is not expected to garner enough support to pass the Democratically-controlled Senate. The House plan, known as "cut, cap and balance," conditions an increase in the U.S. borrowing limit on an amendment to the U.S. Constitution that would require a balanced budget each year.
The House plan would limit federal spending at 18 percent of economic output over the next decade, a figure House Republicans says is appropriate because it would place spending in line with average revenue over the last three decades.