Senate leaders 'very close' to debt, shutdown deal

Courtesy ABC News

With less than a day remaining before the debt limit is reached, Congress will need to work feverishly today to pass compromise legislation that would extend the debt ceiling and end the government shutdown.

The hope now lies in the Senate, where Majority Leader Harry Reid, D-Nev., and Minority Leader Mitch McConnell, R-Ky., have worked for days to craft compromise legislation.

Both sides say they believe those talks will soon yield a proposal that would pass the Senate and eventually be taken up in the House.

But what happens there could test what little political strength House Speaker John Boehner, R-Ohio, has left.

Boehner suffered a major loss Tuesday when his proposals to end the impasse twice did not appear to have enough votes from Republicans to pass on the House floor.

And the Senate's proposal is not expected to include much of what conservative Republicans could support, which could make its path in the House rockier.

If Boehner insists on passing legislation with a majority of his caucus, he would be forced to amend a Senate proposal. Democrats, on the other hand, have encouraged him to take up the Senate's proposal with help from Democratic votes. But such a scenario would be a damaging political defeat for a Republican House speaker who has already struggled to corral his strong-willed caucus.

Either way, however, Republicans now face the reality that they will not get any major concessions from Democrats in exchange for raising the debt limit and re-opening the government. It will be an ignominious end to a saga that has ravished the party in public opinion polls and has raised doubt in financial markets that the two political parties are capable of resolving their differences.

Neither the Senate plan nor the House's short-lived proposal defunded or postponed President Obama's health care law, which was the center of tea party Republican demands for re-opening the government.

And even more modest concessions put forward by Boehner -- for example to repeal the unpopular tax on medical devices and repeal government subsidies for health care for congressional and administration staffers -- could not get enough Republican support to pass.

All eyes will be on financial markets today as the clock ticks closer to zero hour for the debt limit.

Asked whether there are concerns about how the markets will react tomorrow, Sen. Chuck Schumer, D-N.Y., suggested that they would be heartened by signs of progress.

"Obviously we want to get this done as quickly as possible for the good of the country, the markets, etc but the markets should know that right now it's not done yet but we're on a good track," Schumer said Tuesday night.

ABC News' Arlette Saenz contributed to this report.

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