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Spending stumbling block to budget deal

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Posted: Monday, October 14, 2013 4:30 am

WASHINGTON — Senate Republicans and Democrats hit an impasse Sunday over spending in their last-ditch struggle to avoid an economy-jarring default in just four days and end a partial government shutdown that’s entering its third week.

After inconclusive talks between President Barack Obama and House Republicans, Senate Majority Leader Harry Reid, D-Nev., and Minority Leader Mitch McConnell, R-Ky., took charge in trying to end the crises, although a conversation Sunday afternoon failed to break the stalemate.

“I’m optimistic about the prospects for a positive conclusion to the issues before this country today,” Reid said as the Senate wrapped up a rare Sunday session.

The two cagy negotiators are at loggerheads over Democratic demands to undo or change the automatic, across-the-board spending cuts to domestic and defense programs that the GOP see as crucial to reducing the nation’s deficit.

McConnell insisted a solution was readily available in the proposal from a bipartisan group of 12 senators, led by Sens. Susan Collins, R-Maine, and Joe Manchin, D-W.Va., that would re-open the government and fund it at current levels for six months while raising the debt limit through Jan. 31.

“It’s time for Democrat leaders to take ‘yes’ for an answer,” McConnell said in a statement.

But six Democrats in the group and a spokesman for Collins said that while negotiations continued this weekend, there was no agreement.

The latest snag comes as 350,000 federal workers remain idle, hundreds of thousands more work without pay and an array of government services, from home loan applications to environmental inspections, were on hold on the 13th day of the shutdown.

Unnerving to world economies is the prospect of the United States defaulting on its financial obligations Thursday if Congress fails to raise the borrowing authority above the $16.7 trillion debt limit.

Christine Lagarde, the International Monetary Fund’s managing director, warned of a “risk of tipping, yet again, into recession” after the fitful recovery from 2008. The reaction of world financial markets and the Dow Jones today will influence any congressional talks.

McConnell and Republicans want to continue current spending at $986.7 billion and leave untouched the new round of cuts in January, commonly known as sequester, that would reduce the amount to $967 billion.

Democrats want to figure out a way to undo the reductions, plus a long-term extension of the debt limit increase and a short-term spending bill to reopen the government.

© 2014 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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