Urgent efforts to prevent an economically devastating national default rose and then retreated with astonishing swiftness on Thursday, as House Republicans softened their long-standing demands and the White House appeared agreeable to a compromise, 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. Reid referred to a Republican plan to leave the 10-day partial government shutdown in place while raising the nation's $16.7 trillion debt limit and triggering negotiations between the Republicans and Obama over spending cuts and other issues.
House Speaker John Boehner produced the proposal as the partial shutdown entered its 10th day. Separately and more ominously, the administration has warned that unless the federal debt ceiling is raised, the government will deplete its ability to borrow money by next Thursday, an event officials have warned could trigger an unprecedented US financial default that could wound the world economy as well as America's.
Passing temporary funding bills to keep the government running and upping its debt limit so it can pay its bills in full and on time are normally routine matters in Congress. But they've become entangled in Republican demands for cuts in government programs, including Obama's 2010 health care overhaul law, and a bigger effort to cut long-term federal deficits.
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.
And despite Reid's comments, some Republicans said they might look to him to add a provision reopening the government to any debt-limit increase the House passed.
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.
"I would hope the president would look at this as an opportunity and a good faith effort on our part to move halfway, halfway to what he's demanded, in order to have these conversations begin," Boehner, R-Ohio, told reporters earlier in the day.
He spoke after informing his rank and file that he intends to bring legislation to the floor as early as Friday to let the Treasury borrow freely until Nov. 22, contingent on Obama's agreement to open talks on legislation to reopen the government and discuss other pressing issues.
That would leave in effect the partial government shutdown, in its 10th day Thursday, that has idled 350,000 federal workers but so far has not produced the type of widespread economic hardship that a default might mean.
International Monetary Fund chief Christine Lagarde warned a news conference on Thursday that US failure to raise its debt ceiling because of a political impasse would do serious damage to both the American and global economies.
Some Republicans have downplayed the harm a default would cause and some conservatives still expressed reservations about Boehner's plan.
"I'm not very enthusiastic about that," Republican Rep. Steve King.
Earlier Thursday, Treasury Secretary Jacob Lew warned the Senate Finance Committee that failure to renew the government's ability to borrow money "could be deeply damaging" to financial markets and threaten Americans' jobs and savings. It would also leave the government unsure of when it could make payments ranging from food aid to reimbursements to doctors, he said.
"The United States should not be put in a position of making such perilous choices for our economy and our citizens," the secretary said. "There is no way of knowing the irrevocable damage such an approach would have on our economy and financial markets."
At the Finance committee hearing, Lew confronted Republicans who said the bigger problem was the soaring costs of benefit programs like Social Security pensions and Medicare health care entitlements and the long-term budget deficits the country faces. Many expressed doubt about Lew's description of the consequences of default.
The senior Republican on the panel, Sen. Orrin Hatch, accused the Obama administration of "an apparent effort to whip up uncertainty in the markets."
The frustrating standoff in Washington is weighing down each side's poll numbers, but Republicans are taking the worst drubbing. A Gallup poll put the approval rating for the Republican Party at a record-low 28 per cent. Polls have consistently said the Republicans deserve the greater share of blame for the shutdown.