Reid, McConnell Optimistic On Debt-Shutdown Deal [VIDEO]

After weeks of stubborn gridlock, the Senate's top two leaders raced to reach an agreement Monday that could head off a first-ever U.S. Treasury default threatened for midweek and end the 14-day partial government shutdown.

The stock market turned positive on bullish predictions from the two longtime antagonists at the center of the talks, Majority Leader Harry Reid for the Democrats Republican leader Mitch McConnell for the GOP.

The two men met twice before midafternoon, their sessions sandwiched around a White House announcement that President Barack Obama was calling them and the party leaders in the House for the second time in less than a week to discuss the economy-threatening crises. The meeting was subsequently postponed to give the two lawmakers more time to work.

Visiting a charity not far from the White House, Obama blended optimism with a slap at Republicans.

"My hope is that a spirit of cooperation will move us forward over the next few hours," he said. And yet, he added, "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."

Any legislation would require passage in the Senate and also in the House, where a large faction of tea party-aligned lawmakers precipitated the shutdown two weeks ago despite the efforts of both McConnell and Republican Speaker John Boehner. In the days since, polls show a marked deterioration in public support for the GOP.

McConnell also met with Boehner during the afternoon.

Officials said Reid and McConnell were discussing legislation to raise the government's $16.7 trillion debt limit until spring, staving off the possible default. It was not clear if that would permit Treasury Secretary Jacob Lew to employ a series of steps that could add additional months to the extension, as administrations in both parties have done in recent years.

In addition to approving legislation to fund the government until late this year, Reid and McConnell considered appointment of House and Senate negotiators to seek a deficit-reduction agreement that could ease or eliminate a new round of automatic federal spending cuts scheduled to begin in January. While the current round of these cuts fell on both domestic programs and the military, the upcoming reductions would hit primarily the Pentagon.

Also under discussion, officials said, was a possible tightening in income verification requirements for individuals who qualify for subsidies under the health care law known as Obamacare.

Separately, Democrats were resisting a Republican-backed proposal to suspend a medical device tax that was enacted as part of the health care law. The tax is widely unpopular among lawmakers in both parties, and the outcome of that disagreement remained unclear.

The officials spoke on condition of anonymity, saying they were not authorized to comment on the private discussions.

Treasury Secretary Jack Lew has told Congress the deadline for raising the debt limit is Oct. 17.

He, the president and a wide array of economists, bankers and politicians in both parties — at home and backed by world leaders — have all warned that default could have catastrophic consequences for both the domestic and global economies.

The doubters alternatively say no default will occur or that if it does, it won't be the calamity that others claim.

But after holding center stage for much of the current impasse, there was little doubt that they had been shunted aside as Reid and McConnell worked toward an agreement.

As the Senate opened for business on Monday, Reid said he was "very optimistic we will reach an agreement this week that's reasonable in nature."

Moments later, Republican leader McConnell seconded his assessment.

"We have had an opportunity over the last couple of days to have some very constructive exchanges of views about how to move forward. Those discussions continue, and I share (the) optimism that we're going to get a result that will be acceptable to both sides," he said.

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