Senate steps in as House fails to pass a debt ceiling deal

A last minute attempt to wrangle up House Republican support for a fiscal package aimed at reopening the government and dealing with the debt ceiling failed Tuesday, leaving the issue in the Senate’s court.

The nation is only a day away from the first debt ceiling deadline of Oct. 17, which is the day the Treasury exhausts extraordinary spending measures implemented months ago, Compass Point Research & Trading analysts pointed out.  

The first day the Treasury would fall short of entirely covering its obligations is likely to come between the dates of Oct. 22 and Oct. 31, Compass Point advised.

So where are we now?

Compass Point says the focus is now on the U.S. Senate to craft an agreement that is likely to include a continuing resolution that would open the federal government through Jan. 15, 2014. It's also likely to include an extension of the debt ceiling through Feb. 7, 2014. The deal also could include plans to consider a budget resolution through a conference committee, Compass Point advised.

The Senate is expected to reveal its package Wednesday morning.

Word on the hill is that House Republicans believe Speaker John Boehner, R-Ohio, will push a clean six-week debt ceiling bill rather than embrace a Senate-supported package, Compass Point said. But analysts on the hill are skeptical if it's worth it to Boehner at this point.

"We continue to believe the House Republican leadership would prefer to embrace a Senate deal but if Speaker Boehner is pressured to exhaust every option then there could be one more round of proposal and rejection prior to ultimately accepting the Senate package," the analysts noted.

But there’s still a major outlier in the Senate in the form of pushback from individual Senators. There could be a filibuster in the Senate depending on how leaders roll out their plan, Compass Point suggested.

"The Senators most likely to delay the consideration of the package (Sens. Cruz and Lee) have been silent regarding their intentions. Our sense is that these Senators will likely allow this package to be considered without delay, especially since there are a number of other fiscal deadlines in the near future," Compass Point predicted.

At this point, the political maneuverings used in both chambers are critical, especially if the House and Senate plan to get this behind them by Thursday's deadline.

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