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”.

Start your day with The Independent, sign up for daily news emails
Have you tried new the Independent Digital Edition apps?
ebooks
ebooksA special investigation by Andy McSmith
  • Get to the point
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

Recruitment Genius: Accountant

£30000 - £35000 per annum: Recruitment Genius: Summarises financial status by ...

Ashdown Group: HR, Payroll & Benefits Officer - Altrincham - up to £24,000.

£18000 - £24000 per annum + benefits: Ashdown Group: HR, Payroll & Benefits Of...

Recruitment Genius: Salesforce Developer

£50000 - £65000 per annum: Recruitment Genius: Due to continued business growt...

Recruitment Genius: Internal Sales Executive

£20000 - £22000 per annum: Recruitment Genius: An exciting opportunity has ari...

Day In a Page

The saffron censorship that governs India: Why national pride and religious sentiment trump freedom of expression

The saffron censorship that governs India

Zareer Masani reveals why national pride and religious sentiment trump freedom of expression
Prince Charles' 'black spider' letters to be published 'within weeks'

Prince Charles' 'black spider' letters to be published 'within weeks'

Supreme Court rules Dominic Grieve's ministerial veto was invalid
Distressed Zayn Malik fans are cutting themselves - how did fandom get so dark?

How did fandom get so dark?

Grief over Zayn Malik's exit from One Direction seemed amusing until stories of mass 'cutting' emerged. Experts tell Gillian Orr the distress is real, and the girls need support
The galaxy collisions that shed light on unseen parallel Universe

The cosmic collisions that have shed light on unseen parallel Universe

Dark matter study gives scientists insight into mystery of space
The Swedes are adding a gender-neutral pronoun to their dictionary

Swedes introduce gender-neutral pronoun

Why, asks Simon Usborne, must English still struggle awkwardly with the likes of 's/he' and 'they'?
Disney's mega money-making formula: 'Human' remakes of cartoon classics are part of a lucrative, long-term creative plan

Disney's mega money-making formula

'Human' remakes of cartoon classics are part of a lucrative, long-term creative plan
Lobster has gone mainstream with supermarket bargains for £10 or less - but is it any good?

Lobster has gone mainstream

Anthea Gerrie, raised on meaty specimens from the waters around Maine, reveals how to cook up an affordable feast
Easter 2015: 14 best decorations

14 best Easter decorations

Get into the Easter spirit with our pick of accessories, ornaments and tableware
Paul Scholes column: Gareth Bale would be a perfect fit at Manchester United and could turn them into serious title contenders next season

Paul Scholes column

Gareth Bale would be a perfect fit at Manchester United and could turn them into serious title contenders next season
Inside the Kansas greenhouses where Monsanto is 'playing God' with the future of the planet

The future of GM

The greenhouses where Monsanto 'plays God' with the future of the planet
Britain's mild winters could be numbered: why global warming is leaving UK chillier

Britain's mild winters could be numbered

Gulf Stream is slowing down faster than ever, scientists say
Government gives £250,000 to Independent appeal

Government gives £250,000 to Independent appeal

Donation brings total raised by Homeless Veterans campaign to at least £1.25m
Oh dear, the most borrowed book at Bank of England library doesn't inspire confidence

The most borrowed book at Bank of England library? Oh dear

The book's fifth edition is used for Edexcel exams
Cowslips vs honeysuckle: The hunt for the UK’s favourite wildflower

Cowslips vs honeysuckle

It's the hunt for UK’s favourite wildflower
Child abuse scandal: Did a botched blackmail attempt by South African intelligence help Cyril Smith escape justice?

Did a botched blackmail attempt help Cyril Smith escape justice?

A fresh twist reveals the Liberal MP was targeted by the notorious South African intelligence agency Boss