Debt focus shifts to Senate

Warring House and Senate votes late Friday set up a tense weekend of confrontation — and what the White House hopes are still meaningful negotiations — before markets reopen Monday, one day before the threat of default.

Stocks slid for the sixth day in a row as anxiety grew on Wall Street, and Washington’s once dry debt debate has grown into a high stakes game of political chess quite unlike anything the city has seen in decades.

The House moved first, narrowly approving a Republican-backed debt ceiling bill but only after Speaker John Boehner had to tack right again by adding a provision threatening default next year if Congress doesn’t first approve a balanced budget amendment to the Constitution.

The 218-210 vote was quickly followed by a 59-41 Senate roll call tabling the House bill — at least for the moment. And Senate Majority Leader Harry Reid set in motion a 1 a.m. Sunday cloture vote on his own debt ceiling and deficit reduction package estimated between $2.2 trillion and $2.4 trillion.

Reid’s timing was ominous, suggesting the two sides are each trying to back the other into a corner still — without reaching a meaningful deal. But the House bill could yet be resurrected and Republicans predicted it could still be amended as part of a final compromise negotiated by all sides over the weekend.

McConnell's office off the Senate floor in the Capitol saw a steady stream of GOP senators coming and going. Several senators were called for a lunch meeting with McConnell as conversations turned to amending the Reid bill in a way that could win Republican support.

Boehner received a standing ovation when he, also, visited the Senate GOP lunch. But in public comments, several Senate Republicans were sharply critical of the proceedings in the House and suggested they could be open to a compromise with the Democrats.

"What's happening in the House is kind of pathetic," said Sen. Scott Brown (R-Mass.). "We need to get everybody to work together for the good of the country, not any political party or interest."

Sen. Kay Bailey Hutchison (R-Texas) said that "we are all troubled with the delay in resolving this issue."

The goal, congressional officials indicated, was to develop a compromise that could pass the Senate early next week as the clock ticks down and then go back to the House and pass with a coalition of Democratic and Republican votes.

Any such bill would lose a substantial number of House Republicans aligned with the "tea party," who, as the past week has shown, are willing to defy GOP leaders. Many did not view Boehner's bill as conservative enough. Some don't want to raise the debt ceiling at all.

Obama, in a morning statement from the White House, called on Congress to compromise.

"We are almost out of time," Obama said. "I urge Democrats and Republicans in the Senate to find common ground on a plan that can get support — that can get support from both parties in the House –- a plan that I can sign by Tuesday."

The few remaining days before Tuesday's deadline are about finessing specific policy revisions to build political support, but also involve the strategic calculation of running out the clock.

The 11th hour can be a forceful motivator in Washington, particularly over a weekend with jittery financial markets preparing to reopen Monday morning. All sides say they want to avoid putting the economy in further distress. Yet, few senators were willing to publicly acknowledge what changes to the agreement were needed to secure their votes.

The negotiations are focusing on a menu of "trigger" mechanisms to bring about further deficit-reduction measures, without resorting to holding the debt ceiling hostage to those votes.

Reid and McConnell have 24 hours to craft such an agreement. One trigger under discussion would mandate deficit reduction measures if the new committee's recommendations for cuts are not approved by Congress.

Another option would allow a bipartisan group of five Democratic and five Republican senators to force a vote in that body on recommendations it develops if the new congressional committee stalls. Deficits could be reduced by spending cuts or tax revenue increases or both.

The compromise designers also could choose to lay out a "parade of horribles" that no one wants — unacceptable reductions in Medicare or tax hikes — to force lawmakers to agree to less onerous steps. Cuts in defense spending and transportation projects are other possibilities.

Obama wants what he calls a "balanced approach" to the trigger mechanism, according to Democratic officials familiar with the situation. Officials at every level of the White House were involved in talks with Congress, the officials said, speaking on condition of anonymity because they were not authorized to comment publicly.