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”.

News
people
Sport
FootballGerman sparks three goals in four minutes at favourite No 10 role
News
Rumer was diagnosed with bipolarity, attention deficit hyperactivity disorder and post-traumatic stress disorder: 'I was convinced it was a misdiagnosis'
peopleHer debut album caused her post-traumatic stress - how will she cope as she releases her third record?
Sport
A long jumper competes in the 80-to-84-year-old age division at the 2007 World Masters Championships
athletics
PROMOTED VIDEO
Have you tried new the Independent Digital Edition apps?
News
ebooksAn unforgettable anthology of contemporary reportage
Sport
Radamel Falcao was forced to withdraw from the World Cup after undergoing surgery
premier leagueExclusive: Reds have agreement with Monaco
Arts and Entertainment
'New Tricks' star Dennis Waterman is departing from the show after he completes filming on two more episodes
tvHe is only remaining member of original cast
Life and Style
Walking tall: unlike some, Donatella Versace showed a strong and vibrant collection
fashionAlexander Fury on the staid Italian clothing industry
Arts and Entertainment
Gregory Porter learnt about his father’s voice at his funeral
music
Arts and Entertainment
tvHighs and lows of the cast's careers since 2004
Life and Style
Children at the Leytonstone branch of the Homeless Children's Aid and Adoption Society tuck into their harvest festival gifts, in October 1936
food + drinkThe harvest festival is back, but forget cans of tuna and packets of instant mash
Sport
Lewis Hamilton will start the Singapore Grand Prix from pole, with Nico Rosberg second and Daniel Ricciardo third
F1... for floodlit Singapore Grand Prix
New Articles
i100
Life and Style
Couples have been having sex less in 2014, according to a new survey
life
Latest stories from i100
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

Volunteer Trustee opportunities now available at The Society for Experimental Biology

Unpaid Voluntary Position : Reach Volunteering: Volunteer your expertise as Tr...

Early Years Educator

£68 - £73 per day + Competitive rates of pay based on experience: Randstad Edu...

Nursery Nurse

£69 - £73 per day + Competitive London rates of pay: Randstad Education Group:...

Primary KS1 NQTs required in Lambeth

£117 - £157 per day + Competitive London rates: Randstad Education Group: * Pr...

Day In a Page

Scottish referendum: The Yes vote was the love that dared speak its name, but it was not to be

Despite the result, this is the end of the status quo

Boyd Tonkin on the fall-out from the Scottish referendum
Manolo Blahnik: The high priest of heels talks flats, Englishness, and why he loves Mary Beard

Manolo Blahnik: Flats, Englishness, and Mary Beard

The shoe designer who has been dubbed 'the patron saint of the stiletto'
The Beatles biographer reveals exclusive original manuscripts of some of the best pop songs ever written

Scrambled eggs and LSD

Behind The Beatles' lyrics - thanks to Hunter Davis's original manuscript copies
'Normcore' fashion: Blending in is the new standing out in latest catwalk non-trend

'Normcore': Blending in is the new standing out

Just when fashion was in grave danger of running out of trends, it only went and invented the non-trend. Rebecca Gonsalves investigates
Dance’s new leading ladies fight back: How female vocalists are now writing their own hits

New leading ladies of dance fight back

How female vocalists are now writing their own hits
Mystery of the Ground Zero wedding photo

A shot in the dark

Mystery of the wedding photo from Ground Zero
His life, the universe and everything

His life, the universe and everything

New biography sheds light on comic genius of Douglas Adams
Save us from small screen superheroes

Save us from small screen superheroes

Shows like Agents of S.H.I.E.L.D are little more than marketing tools
Reach for the skies

Reach for the skies

From pools to football pitches, rooftop living is looking up
These are the 12 best hotel spas in the UK

12 best hotel spas in the UK

Some hotels go all out on facilities; others stand out for the sheer quality of treatments
These Iranian-controlled Shia militias used to specialise in killing American soldiers. Now they are fighting Isis, backed up by US airstrikes

Widespread fear of Isis is producing strange bedfellows

Iranian-controlled Shia militias that used to kill American soldiers are now fighting Isis, helped by US airstrikes
Topshop goes part Athena poster, part last spring Prada

Topshop goes part Athena poster, part last spring Prada

Shoppers don't come to Topshop for the unique
How to make a Lego masterpiece

How to make a Lego masterpiece

Toy breaks out of the nursery and heads for the gallery
Meet the ‘Endies’ – city dwellers who are too poor to have fun

Meet the ‘Endies’ – city dwellers who are too poor to have fun

Urbanites are cursed with an acronym pointing to Employed but No Disposable Income or Savings
Paisley’s decision to make peace with IRA enemies might remind the Arabs of Sadat

Ian Paisley’s decision to make peace with his IRA enemies

His Save Ulster from Sodomy campaign would surely have been supported by many a Sunni imam