Deal to resolve fiscal crisis stalls in Congress

Hopes for an immediate resolution of Washington's fiscal crisis faded on Capitol Hill on Saturday as angry House of Representatives Republicans accused President Barack Obama of shutting down negotiations with them and turning to the Senate.

Congress was racing against a Thursday deadline to extend US borrowing authority and as Obama ratcheted up pressure on lawmakers to end a partial government shutdown. Hundreds of thousands of federal workers have been furloughed since October 1 when lawmakers failed to reach agreement to fund the government.

In a sign of intensifying negotiations in the Senate, Democratic leader Harry Reid and Republican leader Mitch McConnell were holding talks on Saturday after a chilly period.

"Senator Reid and Senator McConnell are talking to each other for the first time and that's good," Republican Senator Roy Blunt told reporters.

Even if senators craft a proposal to end the government shutdown and raise the debt ceiling, at least some Republican support will be needed to pass it in the House. That support is far from guaranteed, especially if the Senate deal does not include any new attacks on Obama's health care reform law.

After two days of House Republicans talking in positive terms about Obama and their chances for a deal, the bubble burst on Saturday.

House Republicans, after a closed meeting with their leaders, emerged angry, accusing the White House of rejecting their ideas and refusing to negotiate with them.

"I guess they're talking to the Senate now," a dejected House Appropriations Committee Chairman Harold Rogers told Reuters.

"There is no deal; no negotiations going on," House Speaker John Boehner told a meeting of Republican lawmakers, according to Representative Richard Hudson.

The White House had expressed deep reservations with Boehner's plan for a debt ceiling increase that would have extended only to November 22 and other demands that would have required a series of negotiations to continue under the threat of debt default and government shutdown.

A senior House Republican aide said it was unlikely that Republican leaders will craft another proposal and submit it to Obama, now that the focus has shifted to the Senate.

The aide, who asked not to be identified, added that if global financial markets open the week on an overly pessimistic note, that could speed up efforts to bring some sort of legislation to the House floor quickly.

On the Senate side

Meanwhile, the private talks on the Senate side of the Capitol continued.

Much attention focused on a plan written by Senator Susan Collins, a moderate Republican from Maine. It would fund government operations for another six months at their current level and extend Treasury Department borrowing authority through January 31.

After a meeting of some Senate Republicans, Collins told reporters she hoped her plan "leads to a smart conversation that brings an end to this." She said she had not yet spoken to Boehner about it, focusing on her fellow senators for now.

But Collins' plan still had a way to go if it is to become a deal. Thorny issues remained, one Senate Republican source said, as Democrats were pushing for a slightly higher spending level and some Republicans wanted a yearlong spending bill, instead of six months.

Collins' plan also faced early headwinds in the House.

"I don't like it," House Budget Committee Chairman Paul Ryan said, adding it had too many problems to list.

Representative Peter King said House Republicans felt it would push a budget showdown too far down the road and would rob them of more chances to attack Obamacare anytime soon.

But with every passing day, according to opinion polls, Americans' patience seemed to be wearing thinner with Republicans tactics that led to the government shutdown, enhancing prospects of a deal.

Without action by Congress, the United States could be in default by Thursday, when the Treasury warns its borrowing authority would basically be exhausted.

Many House members were heading to their home districts, having been informed that there would be no votes on Saturday, Sunday or before Monday evening.

The complications have deflated hopes for a quick agreement coming as early as this weekend.

"I was optimistic yesterday morning," David French, the chief lobbyist for the National Retail Federation, told Reuters on Saturday. "I'm a little less optimistic today and so are folks I've talked to" on Capitol Hill.

Companies and trade associations have been stepping up their efforts on Capitol Hill as the debt ceiling deadline approaches.

Retailers are particularly concerned about going into a holiday season with debt ceiling jitters hanging over the economy.

Beyond that, French said: "They're concerned about Washington. They're concerned about the level of dysfunction. Our members do not like lurching from crisis to crisis without hope of a resolution."