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US President Barack Obama speaks during a meeting with small business owners in the White House in Washington/AFP

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Optimism but no deal in US fiscal showdown

US President Barack Obama speaks during a meeting with small business owners in the White House in Washington/AFP

US President Barack Obama speaks during a meeting with small business owners in the White House in Washington/AFP

WASHINGTON, Oct 12 – The White House and Republicans painstakingly edged toward a deal to stave off a disastrous US debt default and end a partial government shutdown now sure to hit the two-week mark.

President Barack Obama met face-to-face with Republican senators and spoke by phone with Republican House Speaker John Boehner, as subordinates haggled over the terms of an eventual truce to a bitter standoff.

“We are obviously in a better place than we were a few days ago in terms of the constructive approach we have seen,” White House spokesman Jay Carney said.

“But there is not an agreement.”

Amid rising optimism for a deal, and multiple tracks of dialogue, the main principles of a compromise emerged in public statements from both sides.

It will include a temporary, or more permanent, extension to US borrowing authority — without which Washington could begin to default on its obligations for the first time in history after October 17.

The government, shuttered since October 1, will be fully reopened, possibly on an interim basis, and there will be some kind of commitment from both sides to work towards an elusive deal to tackle the deficit, rein in spending and possibly reform social programs and some aspects of the tax code.

Late in the day, Obama and Boehner, longtime foes who have often struggled to close deals, had what both sides said was a constructive conversation.

But there were signs that the White House was driving a hard bargain, as spokesman Jay Carney said that a rise in the debt ceiling could not be linked to long-term fiscal talks with Republicans, because it could set up repeated threats of default in the coming months.

The White House said earlier in the week that it would be open to a six-week extension of the debt ceiling after October 17.

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But, perhaps sensing that it now has the upper hand in the fight, it now appears to be looking for an extension of borrowing authority from the current $16.7 trillion level for a longer duration.

“It is still acceptable as a bare minimum, sure,” Carney said.

One possible compromise plan is being offered by Republican Senator Susan Collins.

The measure would raise borrowing authority for up to a year, fund the government and repeal a tax on medical devices introduced under Obama’s healthcare law — as an incentive to get conservative Republicans on board.

Significantly, Carney did not rule out ending the medical devices tax — as long as its revenue could be found elsewhere.

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