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Senate leaders reach accord to end budget impasse

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Senate leaders reach accord to end budget impasse

Leaders of the United States Senate reached an accord to end the budget impasse that has halted government activity for the past 16 days. The decision extends the federal government’s borrowing authority one day before the deadline.

“The compromise we reached will provide our economy with the stability it needs,” said Nevada Democrat and Senate Majority Leader Harry Reid. Reid and Republican Minority Leader Mitch McConnell were optimistic both sides would reach an agreement, despite the latter conceding the deal offered Republicans far less than they wanted.

The agreement ended a party-line standoff between the Democrat-controlled Senate and Republican-led House of Representatives. The standoff began with Republicans demanding changes to President Barrack Obama’s 2010 Affordable Care Act, which promises to extend healthcare coverage to tens of millions of uninsured Americans. Republicans objected to raising the debt ceiling without first defunding the landmark health bill. Obama and fellow Democrats demanded the House vote to raise the debt ceiling without policy conditions. In the end, the Democrats got their way, at least for the time being.

The framework agreed to by bipartisan Senate leaders funds the government through January 15, 2014, and raise the debt limit until February 7.

“This party is not uniting behind our core issues,” Representative Kevin Brady told his fellow Republicans. As a result, House Speaker John Boehner was forced to accept whatever framework Senate leaders agreed upon in order to avoid breaching the October 17 deadline, which would have sent the US government toward default.

The agreement that will fund government through January caters to Republican demand to increase income verification requirements for recipients of health insurance subsidies. The agreement won’t cater to a provision backed by Democrats calling for a delay to Obamacare’s reinsurance fee. The Republicans were unsuccessful in implementing much sought-after entitlement cuts as a condition to increase the debt limit. Boehner was unsuccessful in developing a bill that could be supported by House Republicans, having failed several times to bring any of his proposals to a vote.

The bipartisan agreement likely doesn’t absolve any of the core issues dividing Congress, and could set up a second round of negotiations at the February 7 deadline.

The financial markets responded positively to the accord, as the Standard & Poor’s 500 approached its September 18 record high. The benchmark index soared more than 1.3 percent to 1,721.54, with all ten of its major industries gaining at least 0.4 percent. The Dow Jones Industrial Average gained more than 205 points to 15,373.80, with all but three of its members reporting gains. The Dow was led higher by financials, with JPMorgan Chase and Goldman Sachs advancing at least 2.93 percent. The NASDAQ Composite rallied 1.2 percent to 3,839.43.

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