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Agreement Reached To Avoid Default And Open Government

News Of Deal Sends Dow Jones Soaring With 200-Point Gain
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UPDATE: Congress passes bill to reopen government, avert default

WASHINGTON (CBSNewYork/AP) – Senate leaders announced a last-minute agreement Wednesday to avert a threatened Treasury default and reopen the government after a partial 16-day shutdown. Congress was working to pass the measure by day’s end.

The Dow Jones Industrial Average soared on the news that the threat of default was fading and closed up more than 205 points on the day after it was announced a deal was reached.

“This is a time for reconciliation,” said Senate Majority Leader Harry Reid of the agreement he had forged with the GOP leader, Sen. Mitch McConnell of Kentucky. “It’s never easy for two sides to reach consensus. It’s really hard. Sometimes it’s harder than others. This time was really hard.”

WEB EXTRA: BUDGET BATTLE PHOTO GALLERY

The deal would reopen the government through Jan. 15 and increase the nation’s borrowing authority through Feb. 7.

“During which time, we can work toward a long-term budget agreement that prevents these frequent crises,” Reid said.

McConnell said that with the agreement, Republicans had sealed a deal to have spending in one area of the budget decline for two years in a row, adding, “we’re not going back.”

“For today, the relief we hope for is to reopen the government, avoid default and protect the historic cuts we received under the Budget Control Act,” McConnell said. “This has been a long, challenging few weeks for the Congress and the country.”

One prominent tea party lawmaker, Sen. Ted Cruz of Texas, said he would oppose the plan, but not seek to delay its passage.

“I do breathe a large sigh of relief. I guess most Americans do,” Sen. Charles Schumer said.

White House spokesman Jay Carney said the deal “achieves what’s necessary” to reopen the government, remove the threat of default and move past brinksmanship.

Carney said the agreement is bipartisan and that President Barack Obama is looking for Congress to act so he can sign it and remove the threat to the economy. He also praised Reid and McConnell for working together.

Senate staffers worked through the night after House Speaker John Boehner tried Tuesday to rally Republicans around a bill that weakens the president’s health care law. But the legislation died when conservatives made clear it did not go far enough.

The agreement reportedly does make one change to health care law, requiring those seeking subsidies for insurance coverage to verify their income, CBS 2’s Marcia Kramer reported.

But the good news for New Yorkers is that the nation’s parks will re-open and, as a result, New York State will no longer have to pay to have the Statue of Liberty kept open. And 72,000 federal workers in New York will be back on the job after 16 days of shutdown.

The question now is what will Senate and House leaders agree upon during their budget talks. Each side has different expectations, from closing tax loopholes  to cancelling some of the sequestration cuts.

Speaker Boehner said he won’t block a House vote on the bipartisan deal.

“The House has fought with everything it has to convince the President of the United States to engage in bipartisan negotiations aimed at addressing our country’s debt and providing fairness for the American people under Obamacare,” Boehner said. “That fight will continue, but blocking the bipartisan agreement reached today by the members of the Senate will not be a tactic for us.”

Speaker Boehner’s decision means that after the Senate vote, the House will bring the measure to the floor. House Democrats were expected to support it en masse. Only about 17 or 18 Republican votes will be needed, CBS 2’s Kramer reported.

Rep. Peter King (R-N.Y.) told Kramer he will be voting for it and he is confident there will be enough Republicans for passage. He also told Kramer if there was a secret vote many, many more Republicans would vote for passage.

King said he hopes to see changes in Medicare down the road.

“I would do it in a way that does not affect anyone who is currently on Medicare or who will be going on Medicare in the next seven, eight, nine, 10 years, but certainly for younger people today to project  it so there will be a certain means test. Maybe we even increase the age as we go forward,” King said.

The developments came one day before the deadline Treasury Secretary Jacob Lew had set for Congress to raise the current $16.7 trillion debt limit. Without action by lawmakers, he said, the Treasury could not be certain it had the ability to pay bills as they come due.

In addition to raising the debt limit, the proposal would give lawmakers a vote to disapprove the increase. Obama would have the right to veto their opposition, ensuring he would prevail.

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(TM and © Copyright 2013 CBS Radio Inc. and its relevant subsidiaries. CBS RADIO and EYE Logo TM and Copyright 2013 CBS Broadcasting Inc. Used under license. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed. The Associated Press contributed to this report.)

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