WASHINGTON—Senate leaders on Wednesday struck an 11th-hour agreement to avoid a U.S. debt crisis and fully reopen the federal government, putting lawmakers on track toward ending a stalemate that worried investors world-wide and provided striking evidence of congressional dysfunction.Negotiators rejected a Democratic proposal to delay for one year a fee of $63 per insured person levied on groups that offer health policies, including employers, labor unions and insurance carriers—a fee opposed by many large employers and unions. The agreement does includes backpay for all federal workers who were furloughed during the government shutdown.
The Senate deal doesn't include a provision granting federal agencies more flexibility to mitigate the effects of the across-the-board reductions known as the sequester. Congressional aides said the next round of cuts kick in when the stopgap spending measure ends in mid-January, motivating lawmakers to reach an agreement to ease the burden of the sequester's blunt cuts by then. The next round of reductions will bring annual spending levels down to $967 billion from $986 billion, largely through cuts to defense spending.
The setback in the House on Tuesday was the result of pressure from conservatives, who objected both to the Senate bill and Mr. Boehner's alternative because they gave Republicans too little of what they had been demanding. Conservatives have been pressing for major changes in the 2010 health-care law and additional measures to reduce the deficit.
GOP leaders had tried to build backing by including proposals sought by conservatives, including one that would have cut government health-insurance benefits for congressional and administration officials, including their staff, under the 2010 health-care law. But the bill met powerful headwinds when the conservative political group Heritage Action on Tuesday evening announced its opposition and said votes on the measure would be included in the group's influential ratings of lawmakers.
The White House Wednesday provided a little more clarity about when the Treasury will run out of its ability to borrow money. Mr. Carney said that moment will come "at the end of the day" Thursday. The Treasury had previously said the "extraordinary measures" it deployed to keep below the debt ceiling would run out on Oct. 17, without clarifying whether that meant midnight Wednesday or the subsequent day. Beyond Thursday, "the Treasury would have only cash on hand. It would not be able to borrow new money to meet obligations," Mr. Carney said. The Treasury has said that on Oct. 17 it would be left with only about $30 billion to pay the nation's bills.
There was palpable relief among Republicans who had been part of a bipartisan effort to break the deadlock. "We're ready to open the government and we are ready to make sure everyone around the world knows the U.S. pays its bills on time," said Sen. Lamar Alexander (R., Tenn.).
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