US debt: Truce in sight as Senate leaders work on compromise ahead of Thursday's deadline

China calls for 'de-Americanized world' not dependent on the dollar as a reserve currency

Washington DC

With the clock ticking down fast, frantic behind-closed-doors efforts were accelerating on Monday in Washington to craft a stop-gap fiscal package temporarily to reopen the government and authorise an increase in America’s debt ceiling before Thursday when the US Treasury expects to run out of cash to meet all its obligations.

There were growing signs that Democrat Senator Harry Reid, the Senate majority leader, and his Republican counterpart, minority leader Mitch McConnell, were marshaling their troops towards a package that offered face-saving tidbits for both sides while ensuring that funding for the government would be restored until mid-January next year and the authority for the US to raise the debt ceiling would be extended through the middle of February.

While it was unlikely the two Senate leaders would forge a deal without being confident it would pass in their chamber, its fate in the House of Representatives remained uncertain with the right flank of the Republican Party certain to rebel if there is any sense their party had been forced to retreat.  A Senate deal, if approved, would probably be put to the full House for a vote by speaker John Boehner as early as today or Wednesday. 

After sliding early on Monday, markets picked up on fresh word that a truce was at last in sight. Senator Reid opened a Senate session saying he was “very optimistic we will reach an agreement this week that’s reasonable in nature”.  Mr McConnell suggested in his own comments that he concurred saying they had had a “couple of very useful discussions”. The Dow Jones industrial average added 64.15 points, or 0.4 percent, to close at 15,301.26

The partial shutdown has now entered a third week, with 350,000 federal workers on furlough without pay, while Thursday remains the deadline for an agreement to be struck on raising the debt ceiling without which the US could risk a first-ever default on its debt.  The deal taking shape appeared to be a big retreat for Republicans, who have seen public opinion turn sharply against them. Some on the right flank had wanted to use the crisis to pare back or even hobble Mr Obama’s healthcare reforms.

Visiting a local Washington food bank charity, Martha’s Table, Mr Obama struck a cautiously optimistic note. “My hope is that a spirit of cooperation will move us forward over the next few hours,” he said. “If we don’t start making some real progress both in the House and the Senate, and if Republicans aren't willing to set aside some of their partisan concerns in order to do what's right for the country, we stand a good chance of defaulting."

In a vivid illustration of how  the squabbling on Capitol Hill has implications far beyond the Washington beltway and indeed America’s borders, an impatient China, which holds more American debt than any other nation, called for a ‘de-Americanized world’ where the dollar is no longer the chosen international reserve currency.

The case was made in a sharply worded editorial published by the official Xinhua news agency. “As US politicians of both political parties are still shuffling back and forth between the White House and the Capitol Hill without striking a viable deal to bring normality to the body politic they brag about, it is perhaps a good time for the befuddled world to start considering building a de-Americanized world,” it said.

With global growth barely returning after the 2008 crash, including in the Eurozone the political crisis here could hardly be coming at a less helpful time At the weekend the head of the IMF, Christine Lagarde, warned sternly of the "risk of tipping, yet again, into recession” if solutions are not found this week.

The broadside by Xinhua, which usually represents the views of the Beijing government, was all the more striking because it went beyond even the “pernicious impasse” on the fiscal dossier taking advantage of the crisis to take Washington to task also for taking “the moral high ground” in world affairs while “covertly doing things that are as audacious as torturing prisoners of war, slaying civilians in drone attacks, and spying on world leaders”.

Voices
Mosul dam was retaken with the help of the US
voicesRobert Fisk: Barack Obama is following the jihadists’ script
Arts and Entertainment
Loaded weapon: drugs have surprise side effects for Scarlett Johansson in Luc Besson’s ‘Lucy’
filmReview: Lucy, Luc Besson's complex thriller
News
A cleaner prepares the red carpet for the opening night during the 59th International Cannes Film Festival May 17, 2006 in Cannes, France.
newsPowerful vacuum cleaners to be banned under EU regulations
News
people
PROMOTED VIDEO
Have you tried new the Independent Digital Edition apps?
News
ebooksAn evocation of the conflict through the eyes of those who lived through it
News
A polar bear’s diet is rich in seal blubber and half of its own body weight is composed of fat
i100
News
London is the most expensive city in Europe for cultural activities such as ballet
arts
Travel
Flocking round: Beyoncé, Madame Tussauds' latest waxwork, looking fierce in the park
travelIn a digital age when we have more access than ever to the stars, why are waxworks still pulling in crowds?
Arts and Entertainment
Jeremy Clarkson has rejected criticisms of his language, according to BBC director of television Danny Cohen
tv
Extras
indybest
Arts and Entertainment
Judi Dench appeared at the Hay Festival to perform excerpts from Shakespearean plays
tvJudi Dench and Hugh Bonneville join Benedict Cumberbatch in BBC Shakespeare adaptations
Arts and Entertainment
tv
Sport
Is this how Mario Balotelli will cruise into Liverpool?
football
Independent
Travel Shop
the manor
Up to 70% off luxury travel
on city breaks Find out more
santorini
Up to 70% off luxury travel
on chic beach resorts Find out more
sardina foodie
Up to 70% off luxury travel
on country retreats Find out more
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

Service Desk Analyst (Graduate, Helpdesk, Desktop, Surrey)

Negotiable: Harrington Starr: Service Desk Analyst (Graduate, Helpdesk, Deskto...

Service Desk Analyst (Graduate, Helpdesk, Desktop, Surrey)

Negotiable: Harrington Starr: Service Desk Analyst (Graduate, Helpdesk, Deskto...

Junior Quant Analyst - C++, Boost, Data Mining

£25000 - £35000 per annum: Harrington Starr: Junior Quant Analyst - C++, Boost...

Service Desk Analyst- (Desktop Support, Help desk)

£25000 - £35000 per annum: Harrington Starr: Service Desk Analyst- (Desktop Su...

Day In a Page

Air strikes? Talk of God? Obama is following the jihadists’ script

Air strikes? Talk of God? Obama is following the jihadists’ script

The President came the nearest he has come yet to rivalling George W Bush’s gormless reaction to 9/11 , says Robert Fisk
Ebola outbreak: Billy Graham’s son declares righteous war on the virus

Billy Graham’s son declares righteous war on Ebola

A Christian charity’s efforts to save missionaries trapped in Africa by the crisis have been justifiably praised. But doubts remain about its evangelical motives
Jeremy Clarkson 'does not see a problem' with his racist language on Top Gear, says BBC

Not even Jeremy Clarkson is bigger than the BBC, says TV boss

Corporation’s head of television confirms ‘Top Gear’ host was warned about racist language
Nick Clegg the movie: Channel 4 to air Coalition drama showing Lib Dem leader's rise

Nick Clegg the movie

Channel 4 to air Coalition drama showing Lib Dem leader's rise
Philip Larkin: Misogynist, racist, miserable? Or caring, playful man who lived for others?

Philip Larkin: What will survive of him?

Larkin's reputation has taken a knocking. But a new book by James Booth argues that the poet was affectionate, witty, entertaining and kind, as hitherto unseen letters, sketches and 'selfies' reveal
Madame Tussauds has shown off its Beyoncé waxwork in Regent's Park - but why is the tourist attraction still pulling in the crowds?

Waxing lyrical

Madame Tussauds has shown off its Beyoncé waxwork in Regent's Park - but why is the tourist attraction still pulling in the crowds?
Texas forensic astronomer finally pinpoints the exact birth of impressionism

Revealed (to the minute)

The precise time when impressionism was born
From slow-roasted to sugar-cured: how to make the most of the British tomato season

Make the most of British tomatoes

The British crop is at its tastiest and most abundant. Sudi Pigott shares her favourite recipes
10 best men's skincare products

Face it: 10 best men's skincare products

Oscar Quine cleanses, tones and moisturises to find skin-savers blokes will be proud to display on the bathroom shelf
Malky Mackay allegations: Malky Mackay, Iain Moody and another grim day for English football

Mackay, Moody and another grim day for English football

The latest shocking claims do nothing to dispel the image that some in the game on these shores exist in a time warp, laments Sam Wallace
La Liga analysis: Will Barcelona's hopes go out of the window?

Will Barcelona's hopes go out of the window?

Pete Jenson starts his preview of the Spanish season, which begins on Saturday, by explaining how Fifa’s transfer ban will affect the Catalans
Middle East crisis: We know all too much about the cruelty of Isis – but all too little about who they are

We know all too much about the cruelty of Isis – but all too little about who they are

Now Obama has seen the next US reporter to be threatened with beheading, will he blink, asks Robert Fisk
Neanderthals lived alongside humans for centuries, latest study shows

Final resting place of our Neanderthal neighbours revealed

Bones dated to 40,000 years ago show species may have died out in Belgium species co-existed
Scottish independence: The new Scots who hold fate of the UK in their hands

The new Scots who hold fate of the UK in their hands

Scotland’s immigrants are as passionate about the future of their adopted nation as anyone else
Britain's ugliest buildings: Which monstrosities should be nominated for the Dead Prize?

Blight club: Britain's ugliest buildings

Following the architect Cameron Sinclair's introduction of the Dead Prize, an award for ugly buildings, John Rentoul reflects on some of the biggest blots on the UK landscape