WASHINGTON D.C. —
Urgent efforts to prevent an economy-tanking U.S. default rose and then retreated with astonishing speed Thursday, as House Republicans floated a compromise and the White House appeared amenable, only for Senate Democrats to declare it unacceptable.
“Not going to happen,” declared Majority Leader Harry Reid, standing outside the White House after he and fellow Democrats met with President Barack Obama. The Republican plan would leave the 10-day-old partial government shutdown in place while raising the nation’s $16.7 trillion debt limit and setting up negotiations between the GOP and Obama over spending cuts and other issues.
Heartened by any hint of progress, Wall Street chose to accentuate the positive. After days of decline, the Dow Jones industrial average soared 323 points on hopes that the divided government was taking steps to avoid a default. Reid’s dismissive comments at the White House came at the end of the trading day.
Senate Republicans forged ahead on an alternative of their own that would ease both the debt-limit and shutdown crises at once. Officials said that it would require Obama to agree to some relatively modest changes to the health care law that stands as his signature domestic achievement.
The up-and-down day coincided with a dour warning from Treasury Secretary Jack Lew, who told lawmakers that the prospect of default had already caused interest rates to rise — and that worse lay ahead.
Appearing before the Senate Finance Committee, Lew said the Treasury must pay Social Security and veterans benefits as well as salaries to active duty military troops during the second half of this month. He said failure to raise the debt limit by Oct. 17 “could put timely payment of all of these at risk.”
House Speaker John Boehner led a delegation of fellow Republicans to the White House for a late-afternoon meeting with Obama as the two sides groped for a way out of the latest in a string of crises. House Majority Leader Eric Cantor later pronounced the meeting useful and said there would be further conversations.