Focus on McConnell, Reid as Senate Eyes Shutdown Fix

Republican and Democrat leaders' agreement to negotiate raise hopes of an end to impasse.
14:18 | 10/14/13

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Transcript for Focus on McConnell, Reid as Senate Eyes Shutdown Fix
This is a special group. I'm -- company -- -- ABC news digital special report Washington. -- deadlines the government shut down a live picture of the capital the standoff now going into its. Third week the US just days away the possibility of defaulting on its. Loans and debts the first time in history -- move in front that could cause. Our global market tailspin. A lot of state we have team coverage on the government -- -- -- in Washington DC watching the congressional showdown. My essential -- from Yahoo! finance as checking the markets McChrystal wanted to do -- ABC Susan's only join us from Washington as well. With a look at where we stand now Susan. That's right Dan across the country and the capital people are losing patience with the gridlock that is paralyzed Washington. As a weekend of negotiations failed to produce a compromise to reopen the government and stave off default. -- -- Yeah yeah. I didn't -- her external military activists of the streets. Pulling down the barricades at the close Lincoln Memorial and counting. -- -- Washington is listening is his frustration with just three days to go before the government hits its debt limit there is still. -- deal on Capitol Hill. While Republicans have given up demands to defund or delayed Obama care. Now Democrats are pushing for an end to the spending cuts from the sequester. A non starter Republicans say here's what I'm worried about -- -- coming out of this and it. That a majority Republicans can't vote for in the house but all eyes remain on the senate in hope of the dramatic last minute compromise. But neither the house nor the senate came in before mid -- today. Even as the clock ticks meanwhile several states have taken matters into their own hands reopening national parks and monuments with their own funds. Eager to recapture of lost revenue from tourism. The statue of liberty is open so was the Grand Canyon we are committed but we wish that the -- would move along and do their job. Now there's word this hour about a meeting at the White House this afternoon the president vice president and bipartisan leaders of the house and senate will be in attendance -- In the biggest moment that we have seen so far -- -- Susan thank you for that I wanna go to -- ABC's Devin Dwyer -- obviously been watching this over the weekend. In the biggest wrinkle now this is -- Democrats is regarding sequestration. That's -- Republicans are accusing Democrats of moving the goalposts after all those many days of simply. Demanding a clean passage of attitude to open the government and into raise the debt limit now. Here we are talking about a bunch of other matters yes the waters have definitely. Become a little bit more money and all that stuff -- everybody on Capitol Hill today. Is wondering just what's gonna commodities closed door meetings between senators there are really -- separate tracks in negotiations going on right now. -- hearing lots of rumors lots a little tidbits coming out but the bottom line right now as we still. Don't have anything definitive to fix either of these two problem and -- the house is not in session yet the senate will come will convene this afternoon. -- what are we hearing about this meeting at the White House what do we now. That's right well let's just announce a few minutes ago and this would be. Really the first time and I think almost two weeks since all the leaders were together with President Obama of course this would be. House Minority Leader Nancy Pelosi speaker Boehner we'd also have Senate Minority Leader Mitch McConnell. Harry -- all the principals will gather this afternoon. It's a sign that maybe they're gonna come together and talk about some sort of proposal that they've been -- hashing out behind closed doors. But we should get some sort of update by this evening and talk to me a little bit about the relationship. At that senate majority leader Harry Reid and minority leader Mitch McConnell. I have been having because in the past they've obviously been the vehicle to broker some kind of a bipartisan solution. That's right well they have not generally had very good ties and in these two men. Dislike each other very much they put on personal -- that they're you know friends. In senate speak. But really there there has been such -- little common ground between the two and there are such deep -- trust. After all of these repeated kind of brinksmanship. Episodes that we've had over the past few years. But -- right now it is surprising to see. Republican senate minority leader Mitch McConnell median -- that Harry Reid behind closed doors. There are some signs that they are trying to work out a deal on their -- there's also a separate track going on right now. Being led by our Republican of Maine Susan Collins she's got a proposal that's kind of cook and right now. But it does appear that Reid and McConnell are the key you have brokers at at the table right now in its interest -- just the last time we flirted with the fault. It was Vice President Biden -- he's really nowhere to be found this time. -- -- let me ask you about this -- because it seems -- just last week there was the possibility that the it the the combination of the issues. Of creating a budget and then obviously reason that that's and it almost -- that they could -- dealt with separately. It now seems almost. Impossible for them to be it to be that way. That's right these two issues are really inter -- right now so lawmakers are looking at. At some sort of deal it's it's very likely it's going to be something very short they're gonna kick the can down the road. So the bad news as we will probably be talking about all of this stuff again it is quite the mess. But they are interlinked -- -- talking both plans that are on the table on the senate side are talking about reopening the government for some short period of time. Along with -- net debt debt limit into possibly next year. So they are intertwined -- unclear at this point -- with all the attention on the senate is just how the house will respond to this remember. In in many respects this crisis sort of began and the house that conservative faction. They're gonna have to sign off on this deal. Whatever deal may come out of the senate with the White House so. We still have a ways to go before this is fully resolved and again just a few days know -- that defaulted. And -- let me ask you about this what about the Affordable Care Act commonly known as obamacare with a lot of senior Republicans in the senate -- in fact that that is an issue that should not be tied to this budget should not be tied to the debt ceiling. I debate has that course changed. It is remarkable how far we've come since Obama care. Was at the front in center of this whole debate remember. House Republicans saying they wanted to -- it at first and they want to delay it than they wanted to repeal certain provisions of it. It right up to the point where the government shut down now here we are it's really taken a back -- we heard over the weekend. Some leading Republican senators trying to talk some sense into their colleagues in the house same look. We don't like this piece of legislation anymore than you do but we've lost this part of the battle for now we need to set it aside fight it out the ballot box. Let's focus on some other matters including the budget and that's where it seems to be right now so it really is off on the side. All right and of course as we are now well and to date fourteen of the shut down Devin Dwyer and Washington -- thank for that. Of course focusing on the impact of what it could mean if in fact Washington comes at an impasse and that debt ceiling. Is not race when -- bring an ABC's Wendy Gillette in New York talk about impacts might be seen Wendy. -- investors are keeping a very close eye on Wall Street today to see how US markets react to that looming deadline for the debt ceiling later this week. The -- with a New York Stock Exchange rang signaling what could be a rocky few days on Wall Street. The markets sank as investors nervously anticipate -- the nation's elected officials will allow the US to default on its debts. -- think that's been a trigger a kind of chain reaction in financial markets such extremely unpredictable. Nobody knows what will happen if you if if -- suddenly have to call into question. The viability of treasury securities. The two week government shutdown has already cost the US more than 100 million dollars a day. But economists say not raising the debt ceiling could lead to a recession. And with just days to go before defaults the White House and congress have no meetings scheduled. After Thursday the government would have enough money. To pay about two thirds of its bills 106. Billion short of 320. Billion dollars in commitments. The International Monetary Fund is warning of a global financial catastrophe. If the US defaults. That would. Bring about so much uncertainty. So much risk of disruption. But the standing of the US economy would. Again. Be at risk a default could also have far reaching consequences for your personal finances. -- retirement accounts could lose value and loans for big purchases like cars and homes could get more expensive and difficult to get. Many analysts expect that a deal will be reached before Thursday but that is not a certainty. Which of course is rattling financial markets and worrying leaders around the world live in new York -- back to you. Our Wendy thank you for that I want to bring in Yahoo! finance Mike -- -- might watching the market -- today Mike obviously we are venturing into some uncharted territory. -- out it is uncharted if we get there but if we don't get there and there is a deal -- -- very much -- because it happened in 2011 and also at the end of last year so I think that what's going on now as investors default assumption is that a deal gets -- the markets are acting that way in fact just this morning the markets stock market has recovered most of the early morning losses. On the news that there will be that meeting this afternoon so I think basically that the expectation. Is that it will get resolved at least deferred. You know the kind of big tough decisions with some kind of a deal if that doesn't turn out to be the case yes -- be a big negative shocked to investors but right now. The market's not betraying a whole lot of concern that there's risk of -- the fall. And then from what I understand and obviously the government has about thirty billion dollars in cash right now is that correct. After the seventeenth they estimate the treasury estimates it will have thirty billion remaining following that stated deadline you know continual talk a little bit about some of the accounting techniques that have been discussed and -- certainly have not been received very favorably. Either by folks on Wall Street or in Washington that in fact. Is there any wiggle -- -- It's all hypothetical all the treasury wants to damp. It down any talk of this because they're not even sure it's legal. To prioritize payments are basically on any given day the treasury may take in more cash than it now -- it lays out and vice Versa. There's some idea that because interest payments on the debt are relatively small percentage of overall tax receipts you could say okay we pay that person and go down the list. With entitlements and all the rest of it it so happens that you would cover a lot of the non discretionary spending if not all of it. But the treasury says -- systems don't work this way they don't think they can do it it probably isn't legally probably amounts to effectively -- default so those are some of the things have been on the table along with some kind of extraordinary measures of you know very fancy. Kind of engineered bond issues that were taken more -- season. That and somehow get in -- debt limit. I don't think we're going to get their I don't think anybody wants to get there. And interestingly enough I think that the administration wants to kind of eliminate a lot of talk of this because they don't want this sense out there that there's a back door easy. Way around this to work around is not something that they want. People in congress to think it's possible -- indicated it might forestall an actual deal. Now obviously fresh and a lot of people's minds is the crisis of 2008 and I have been. Seen some reports that -- has been brought up as a possible comparison to what could in fact happen if in fact we get to the seventeenth deadline and nothing is resolved. Are those fair comparisons. Well it's fair in the sense that you know that's one benchmark for a complete. Kind of systemic market meltdown. And that would be potentially what we would see. If in fact treasurys were in default now the reason that we can't say for sure whether it will be that bad or worse or better. Is that we just don't know simply because treasuries are not just about. You know people lending money the government and getting a little interest. In return they actually are the collateral for most of what gets traded in the financial markets banks use them as collateral every single day for almost all of their operations to how would they be treated. As the baseline asset for all the financial markets we just don't know and so I do think that you -- you could look to something like 2008 and say you know remember -- -- that was when the financial system stopped working. As -- supposed to then we might be in for something like that again I feel like a lot of this is -- occurring on paper hypotheticals. And nobody fully anticipates we're gonna get quite to that point. And yet at the same time when it comes to our everyday finances whether it be in the interest that -- -- on loans or even our 401 case people still are talking about that. About the potential impact that a default could have. Completely talking about it but what's interesting about it is that the actual you know yields on on the bonds -- the -- that that are now. It's being listed on treasuries have come down from their highs so the -- it would normally impacts somebody is to say well if interest rates are gonna blow higher because of the -- in default that would make loans everywhere in the economy on mortgages and auto loans much more expensive but that's not been what's happening in anticipation of this possible thing. It happened last time -- 2011 to. Treasury bonds actually came down and you people bought more of them as a safe haven T even know -- -- may have been in -- back then -- downgrade. All right -- -- -- from Yahoo! finance Mike -- experience that was certainly appreciate that. And for everyone -- and salty Devin Dwyer Wendy -- all weighing in this afternoon as now -- -- entering the fourteenth day at the government shut down and as that this October 17 deadline. Is very quickly approaching. For now I'm down that there -- New York with this ABC news digital special report.

This transcript has been automatically generated and may not be 100% accurate.

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