WASHINGTON (AP) - Top Democrats in both houses of Congress emerged from a Sunday afternoon crisis meeting, with the party's leader in the Senate saying he hoped the upper chamber would vote soon on a compromise deal that would raise the nation's borrowing limit and avert an unprecedented default on its debt.
Senate Majority Leader Harry Reid told reporters who flocked around him as he left the office of Rep. Nancy Pelosi, the Democratic leader in the House, that he hoped there would be a vote on the plan Sunday night.
Reid later issued a statement saying he had signed off on a pending agreement , subject to approval by the Democratic rank and file in the Senate.
There were indications the deal had found sufficient backing from Senate Democrats. But it still lacked support among the most liberal Democrats and conservative, tea party-backed Republicans in the House of Representatives.
Pelosi said she would be meeting with House Democrats about the compromise measure on Monday.
"We all may not be able to support it or none of us may be able to support it," Pelosi said, indicating Democrats would want to study the plan.
Should it pass both houses, the compromise legislation stood to close out one of the nastiest partisan political fights to engulf the American government in recent memory.
Democrat Reid and Senate Minority Leader Mitch McConnell, a Republican, spoke optimistically earlier in the day that an agreement was in reach, but Washington fell silent on a blisteringly hot summer afternoon as politicians continued to huddle for last minute talks on the plan.
But by late Sunday the White House, McConnell and Republican House Speaker John Boehner remained silent.
Privately, officials said a final sticking point concerned possible cuts in the nation's defense budget in the next two years. Republicans wanted less. Democrats pressed for more in an attempt to shield domestic accounts from greater reductions.
Reid had said he was "cautiously optimistic," while McConnell said that negotiators were "very close." But as the day wore on and legislators continued crisis sessions in the capitol, politicians on the extremes of both parties lambasted the deal and threatened to try to block an agreement even with the deadline for a U.S. default ticking down to midnight Tuesday.
Without legislation in place by then, the Treasury will not be able to pay all its bills, raising the threat of a default that administration officials say could inflict catastrophic damage on the economy.
If approved, though, a compromise would presumably preserve America's sterling credit rating, reassure investors in financial markets across the globe and possibly reverse the losses that spread across Wall Street in recent days as the threat of a default grew.
The broadest outlines of the emerging plan, a deal being worked out in negotiations involving McConnell and Vice President Joe Biden, would raise the federal debt limit in two stages by at least $2.2 trillion, enough to tide the Treasury over until after the 2012 elections.
Big cuts in government spending would be phased in over a decade. Thousands of programs - the Park Service, Internal Revenue Service and Labor Department accounts among them - could be trimmed to levels last seen years ago.
No benefit cuts were envisioned for the Social Security pension system or Medicare, the federal program that provides health care payments to the elderly. But other programs would be scoured for savings. Taxes would be unlikely to rise.
Any agreement would have to be passed by the Democratic-controlled Senate and Republican-controlled House before going to the White House for Obama's signature. With precious little time remaining, both chambers were on standby throughout the day, and House Speaker John Boehner was in his office.
The Senate began the day by rejecting an effort to advance a Democratic approach to resolving the debt issue. The vote was 50-49, or 10 short of the 60 votes needed to move forward on legislation proposed by Reid last week. That plan would have carried out $2.4 trillion in deficit reduction over 10 years while raising the debt ceiling by $2.2 trillion. The outcome of that vote was expected and did not directly affect the behind-the-scenes negotiations on a compromise.
Undaunted, Reid said then that "We are hopeful and confident it can be done."
Officials familiar with the negotiations said that McConnell had been in frequent contact with Biden, who has played an influential role across months of negotiations.
The talks were proceeding toward a two-step system for raising the debt limit and cutting spending.
The first step would take place immediately, raising the debt limit by nearly $1 trillion and cutting spending by a slightly larger amount over a decade.
That would be followed by creation of a new congressional committee that would have until the end of November to recommend $1.8 trillion or more in deficit cuts, targeting benefit programs such as Medicare, Medicaid and Social Security, or overhauling the tax code. Those deficit cuts would allow a second increase in the debt limit, which would be needed by early next year.
If the committee failed to reach its $1.8 trillion target, or Congress failed to approve its recommendations by the end of 2011, lawmakers would then have to vote on a proposed balanced-budget constitutional amendment.
If that failed to pass, automatic spending cuts totaling $1.2 trillion would automatically take effect, and the debt limit would rise by an identical amount.
Social Security, Medicaid and food stamps would be exempt from the automatic cuts, but payments to doctors, nursing homes and other Medicare providers could be trimmed, as could subsidies to insurance companies that offer an alternative to government-run Medicare.
Officials describing those steps spoke on condition of anonymity, citing both the sensitivity of the talks and the potential that details could change.
The emerging deal could mark a classic compromise, a triumph of divided government that would let both Obama and Republicans claim they had achieved their objectives.
As the president demanded, the deal would allow the debt limit to rise by enough to tide the Treasury over until after the 2012 elections.
But barring a change, it appeared Obama's proposal to extend the current payroll tax holiday beyond the end of 2011 would not be included, nor would his call for extended unemployment benefits for victims of the recession.
Republicans would win spending cuts of slightly more than the increase in the debt limit, as they have demanded. Additionally, tax increases would be off-limits unless recommended by the bipartisan committee that is expected to include six Republicans and six Democrats. The conservative campaign to force Congress to approve a balanced-budget amendment to the U.S. Constitution would be jettisoned.
Congressional Democrats have long insisted that Medicare and Social Security benefits not be cut, a victory for them in the proposal under discussion. Yet they would have to absorb even deeper cuts in hundreds of federal programs than were included in Reid's bill, which many Democrats supported in a symbolic vote on the House floor on Saturday.