Top US Senate leaders on Wednesday said they have reached a bipartisan agreement to end the over two-week government shutdown and increase the debt ceiling so as to avoid a first-ever default hours before the deadline expires.
The agreement was announced by the Democrat Senate Majority Leader, Harry Reid, on the Senate floor.
"The compromise we reached will provide our economy with the stability it desperately needs," he said.
The House of Representatives will vote on it soon.
"The eyes of the world have been on Washington all this week. That is a gross understatement. While they witnessed a great deal of political discord, today they will also see Congress reach a historic bipartisan agreement to reopen the government and avert a default on the nation's bills," he said.
Reid said after weeks spent facing off across a partisan divide that often seemed too wide to cross, the country came to the brink of a disaster.
"But in the end, political adversaries set aside their differences and disagreements to prevent that disaster," he said.
The new compromise agreement, he said, will fund the government through January 15, 2014 and averts default through February 7, during which time they can work toward a long-term budget agreement that prevents these frequent crises.
The Republican Senate Minority Leader, Mitch McConnell, said the deal will reopen the government, avoid default and protect the historic cuts they achieved under the Budget Control Act.
"This is far less than many of us had hoped for, frankly, but is far better than what some had sought. Now's time for Republicans to unite behind other crucial goals," he said on the Senate floor.
"This legislation is the largest spending reduction bill of the last quarter-century and the largest deficit reduction bill since 1981 that didn't include a tax hike. Preserving this law is critically important to the future of our country," McConnell said.
With time running out, news reports said the legislation would first move through the House and then would breeze through the Senate so as to pass the legislation in time before the October 17 deadline to avoid an unprecedented default on the debt.
Senator Ted Cruz said he will not block the vote, even though he opposes the agreement because it does not address Republican objections to President Barack Obama's contentious 'Obamacare' health reform plan.
Meanwhile, the White House today welcomed the bipartisan Congressional agreement that would reopen the shuttered government and avert the threat of an unprecedented debt default with the treasury set to run out of money and exhaust its borrowing capacity by the end of tomorrow.
"The (US) President believes that the bipartisan agreement announced by the leaders of the United States Senate will reopen the government and remove the threat of economic brinkmanship that has already harmed middle-class families, American businesses and our country's economic standing in the world," White House Press Secretary Jay Carney said.
While there was no formal statement from the White House, Carney's remarks at his daily news briefing came in response to the developments at Capitol Hill where top Senate leaders finally reached an agreement on ending the shutdown and increase the debt ceiling.
Carney said Obama believes that this agreement achieves what is necessary in terms of reopening the government and removing the threat of default and the kind of brinkmanship that the country has seen.
Obama wants the Congress to act on this swiftly and as soon as possible, Carney said. "We haven't seen legislation move through either house at this point. So we are not issuing an official statement of administration policy. But he (Obama) looks forward to Congress acting so that he can sign legislation that will reopen the government and remove this threat from our economy," he said.
Responding to questions, Carney said Obama made clear his position that he would not allow a situation to develop where he paid "ransom" to any party in Congress that was trying to extract unilateral political concessions in return for Congress fulfilling its fundamental responsibilities.
"He (Obama) believes that's the right position for him to take, that it was the right position, it is the right position, and it's the right position for presidents of the future to take because our economy is extremely dependent on the faith and credit that is invested in it by investors around the world," he said.
"In other words, there is a real, even if intangible value to the safeness of investing in the United States. Obviously default would cause even more harm. But we've seen there is already a price that has been paid." "As we saw in 2011 and we've seen again now in the various ways that the flirtation with crossing that line and flirting with default has brought about consequences," Carney said.