Officials report progress on debt talks

Officials said Saturday night the White House and Republican leaders in Congress are making significant progress toward a last-minute agreement to avoid a default threatened for this week.

The plan under discussion would raise the debt limit by about $2.4 trillion and enact spending cuts of a slightly larger amount in two stages, the officials said.

The deal would also require Congress to vote on a balanced budget amendment to the Constitution, but not require its approval, they said.

The officials spoke on condition of anonymity, citing the sensitivity of the negotiations.

Earlier in the evening, Senate Majority Leader Harry Reid (D-Nev.) said that at the request of White House officials, he was postponing a test vote set for shortly after midnight on his own legislation to raise the debt limit while cutting spending.

Reid moved the vote from 1 a.m. to 1 p.m., saying negotiations with Minority Leader Mitch McConnell (R-Ky.) and the White House had made enough progress.

While Reid cautioned that "there is still a distance to go," the No. 2 Democrat in the U.S. Senate, Dick Durbin of Illinois, said he was more optimistic about chances for a debt-limit increase deal.

"We're a long way from any kind of a negotiated agreement, but there is certainly a more positive feeling about reaching an agreement this evening than I've felt in a long time," Durbin said.

Unless Congress acts before Tuesday to raise the $14.3 trillion, Treasury officials have said they will begin to run out of cash to pay the nation's bills.

That could force the government into default, an outcome that could devastate the sputtering U.S. recovery and global financial markets. Over the past week, the Dow Jones industrial average fell nearly 540 points amid rising anxiety about the debate in Washington.

Throughout the afternoon and into the evening, Reid and McConnell conducted separate talks with the White House in search of an agreement.

McConnell, who had been negotiating privately with Vice President Joe Biden, said earlier Saturday evening that he was optimistic a deal could be reached.

Talks were focused on somehow combining the debt-limit plans that emerged from bipartisan negotiations among congressional leaders last weekend.

The key difference was the length of the debt-limit extension. House Speaker John Boehner's bill, which passed the House but died in the Senate on Friday, would have granted a reprieve only through February or March.

Reid's bill, a version of which was defeated in the House Saturday, would increase the debt limit into 2013 by counting $1 trillion in savings from winding down wars in Iraq and Afghanistan.

The president has threatened to veto any legislation that would require a second vote in Congress for any additional borrowing authority to take effect.

"I'm confident that a final agreement that will adopt the Senate's long term approach rather than the short term band aid proposed by the House of Representatives will move forward," Reid said.

Lawmakers and administration officials were trying to design a mechanism to force a 12-member bipartisan committee to give Republicans their cuts and President Barack Obama his debt-limit increase. Many ideas were in play from both parties, and Senate Budget Committee chairman Kent Conrad (D-N.D.) said his staff had drafted three into formal legislation.

Aides said the sticking point remained Republican opposition to a trigger that would force automatic tax increases if the committee failed in its work. Democrats, meanwhile, opposed any trigger that only cut spending.