WASHINGTON, Aug 4 (Reuters) – U.S. congressional leaders struck a deal on Thursday to resolve a partisan dispute and end a partial shutdown of the Federal Aviation Administration that has halted airport projects and threatened thousands of jobs.

The standoff, which began on July 22, has centered on partisan differences over full funding of the agency through the middle of next month.

Because of the disruption, certain airline ticket taxes were not collected, leaving a huge hole in government revenues for aviation programs.

“I am pleased to announce that we have been able to broker a bipartisan compromise between the House and the Senate,” Senate Majority Leader Harry Reid said in a statement.

Reid said the compromise did not resolve key differences that held up the stopgap funding legislation, leaving contentious issues until lawmakers return from recess in early September.

Congress adjourned earlier this week for its August recess but Democratic aides said the Senate will finalize the deal on Friday by approving a version of the spending measure already passed by the U.S. House of Representatives.

The Senate will use a procedure that does not require lawmakers to return for a vote.

WASHINGTON (Reuters) – Senate Republican Leader Mitch McConnell displayed his skills as a dealmaker to avert an unprecedented debt default that could have blown a hole in the U.S. economy and stung his party in next year’s elections.

With polls showing Americans see his Republicans as more stubborn and unwilling to compromise than President Barack Obama’s Democrats, McConnell reached out to Obama a week ago to end a prolonged stalemate and find common ground.

Thanks largely to McConnell, the Senate is expected to give final approval on Tuesday to a compromise that raises the debt ceiling to avert a default while cutting spending. McConnell hopes it also shields his Grand Old Party from voter backlash.

“Mitch is very, very smart and very, very good at politics,” said Ted Kaufman, a Democrat who served with McConnell in the Senate. “I think McConnell’s top concern is ‘How do I save the Republican Party?’ If the GOP goes down, Mitch McConnell goes down.”

Depending on how things work out, McConnell could get his wish and run the Senate in 2013 — provided Republicans pick up at least four seats to take control from the Democrats.

He will also have to survive the ire of the far right, particularly members of the conservative Tea Party movement, many of whom opposed any hike in the $14.3 trillion debt limit.

“He has neither courage nor convictions,” groused Judson Phillips, founder of Tea Party Nation, one of the movement’s biggest groups.

WASHINGTON, July 31 (Reuters) – U.S. lawmakers were close to a last-ditch $3 trillion deal on Sunday to raise the U.S. borrowing limit and assure jittery financial markets that the United States will avoid a potentially catastrophic default. Growing momentum toward a compromise raised hopes that a weeks-long partisan battle over cutting the U.S. deficit was nearing an endgame. There are just two days left to lift the debt ceiling, which caps how much money the United States can borrow to pay all of its bills. "We're really, really close to an agreement," said Mitch McConnell, the Senate Republican leader who has been in negotiations with Vice President Joe Biden on a plan to reduce the deficit and permit a vote to raise the debt ceiling. Financial markets showed signs of relief at a deal in the making, as U.S. stock futures jumped and the dollar rebounded on Sunday. Signaling agreement could be imminent, an aide said Senate Majority Leader Harry Reid would support the emerging deal as long as his fellow Democrats back it as well. But another senior congressional aide said a Senate vote was "highly unlikely" until Monday at the earliest. House of Representatives Democratic Leader Nancy Pelosi, a leading liberal whose consent is considered critical to passage of any compromise because it would likely draw limited Republican votes, had yet to stake out her position. She set a meeting with House Democrats on Monday on how to proceed. <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ Full coverage of U.S. budget and debt [ID:nUSBUDGET] FACTBOX-Elements of possible US debt deal [ID:nN1E76T0AF] Graphics package r.reuters.com/nud82s Live blog here ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^> A deal would ease the immediate crisis but repercussions will be felt for years to come. Bitter brinkmanship has turned dysfunction seemingly into the norm in Washington, undercut America's stature as the world's capitalist superpower and set the stage for a deeply ideologically 2012 presidential race when President Barack Obama is seeking re-election. Full congressional approval could come within hours of a final accord, but leaders will first have to gauge whether they have the votes to pass it though the House and the Senate. Many Democrats were skeptical of the deal that Republicans said would cut deficits by up to $3 trillion over a decade. It would force Democrats to stomach deep spending cuts without the accompanying tax increases they wanted. PROGRESSIVE DEMOCRAT OPPOSED In a sign Democratic leaders may lose the support of their most liberal members, Representative Raul Grijalva said he could not back the plan. He is the head of the 74-member Congressional Progressive Caucus. "Today we, and everyone we have worked to speak for and fight for, were thrown under the bus," he said. Some Democratic support will be needed to offset the inevitable loss of Republican conservatives affiliated to the Tea Party and get the deal through the House. David Plouffe, a senior adviser to Obama, said there was general agreement on a plan that would cut the U.S. deficit over 10 years in two stages: roughly $1 trillion up front and the rest based on the recommendation of a joint bipartisan committee. The proposed $3 trillion in savings may calm financial markets but it appears insufficient to avoid a downgrade of America's top-notch AAA rating by Standard & Poor's. The agency last week reiterated that $4 trillion in deficit-reduction measures would be "a good downpayment" to show that Washington was putting the country's finances in order. "It's really unclear whether a downgrade will be avoided as a result of this deal," said Kathy Lien, director of currency research at GFT, New York. WORLD WARNS OF DISASTER British and Japanese officials warned of disastrous consequences for the global economy if the last-ditch talks among lawmakers in Washington failed to agree on raising the U.S. borrowing limit and averting a debt default. Governments across the world fear instability in financial markets because of the key role of the U.S. dollar in global banking and trading systems. [ID:nL6E7IV09J] But with a deal possibly in sight, the Swiss franc, the favored safety currency during this crisis, pulled back from record highs against the dollar, and gold slipped off record highs. Markets were already moving in anticipation of good news. The S&P 500 futures SPc1 bounced 19.8 points, or 1.5 percent, to 1307.40. Gold XAU= fell as the metal, which has reached new heights during the stalemate, lost $16.59 to $1610 an ounce. "At this point, the markets are perceiving that a deal and a vote will be announced," said Quincy Krosby, market strategist at Prudential Financial in Newark, New Jersey. (Additional reporting by Rachelle Younglai, Kim Dixon, Lesley Wroughton, Donna Smith, Laura MacInnis, Margaret Chadbourn, Jackie Frank, Andrew Seaman and David Morgan in Washington, and Walter Brandimarte and Wanfeng Zhou in New York; Writing by Steve Holland and Matt Spetalnick; Editing by Ross Colvin)

WASHINGTON, July 22 (Reuters) – Negotiations between President Barack Obama and the top Republican in Congress were not close to producing a debt reduction deal to avert a looming unprecedented U.S. default, lawmakers said on Friday.

While details were emerging about a possible $3 trillion plan, House of Representatives Speaker John Boehner said talks with the White House had so far failed to forge an agreement to cut spending and raise America’s debt limit by Aug. 2.

“There was no agreement, publicly, privately. Never an agreement and frankly not close to an agreement,” Boehner told reporters. “And so, I would just suggest it is going to be a hot weekend here in Washington D.C.”

Negotiations between Republicans and the Democratic White House toward a deal to raise the $14.3 trillion limit on America’s borrowing are at a critical phase, with less than two weeks before the world’s biggest economy runs out of money to pay its bills.

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Full coverage of U.S. budget and debt [ID:nUSBUDGET]

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WASHINGTON, July 19 (Reuters) – A group of Democratic and Republican senators offered an ambitious plan on Tuesday that could revive stalled U.S. debt talks and the prospect of a long-term deficit reduction deal to avert a default by the United States.

With just two weeks left until the federal government runs out of money to pay all of its bills, President Barack Obama seized on the plan by the so-called Gang of Six as a “very significant step” and urged congressional leaders to start discussing it.

“My hope … is that they tomorrow are prepared to start talking turkey and actually getting down to the hard business of crafting a plan that can move this forward in time for the August 2nd deadline,” Obama said.

But he warned of the need for a backup plan, which Senate leaders were working on, that could be voted on next week. Jon Kyl, the No. 2 Republican in the Senate told reporters: “I’ve talked to enough people to think it will pass.”

The U.S. government will default on its obligations by that date if Congress does not allow the Treasury to sell more debt. That could force the U.S. economy back into recession and wreak havoc on global financial markets.

White House talks on a comprehensive deficit-reduction deal have stalled over tax increases, which Republicans oppose.

Obama, a Democrat, said he hoped the “Gang of Six” proposal – which would require each party to ease back from entrenched positions — could help form the basis of an agreement.

WASHINGTON (Reuters) – Saying time was running out for an agreement to raise the U.S. borrowing limit, President Barack Obama on Tuesday supported a bipartisan proposal for a new deficit-reduction plan aimed at averting a debt default.

Obama said the ambitious budget plan brought forward on Tuesday by the “Gang of Six” group of senators could provide new ideas for breaking the impasse in Congress over raising the federal government’s credit limit by August 2.

He said the proposal was broadly consistent with his approach on reducing debt and deficits. Obama urged congressional leaders of both parties to start discussing it.

“My hope … is that they tomorrow are prepared to start talking turkey and actually getting down to the hard business of crafting a plan that can move this forward in time for the August 2nd deadline,” Obama said.

Senate Budget Committee Chairman Kent Conrad, one of the six Democratic and Republican senators who have been working since December on a deficit-reduction plan, said the proposed $3.75 trillion in savings over 10 years contains $1.2 trillion in new revenues.

Obama, a Democrat, is working with lawmakers to reach an agreement on deficit reduction so Congress can increase the debt ceiling by August 2, when the government is expected to run out of money to pay its bills.

The stalemate on debt talks has shaken global financial markets and the situation could worsen unless a deal is struck soon.

WASHINGTON (Reuters) – With time running short, the White House said on Monday it was pursuing a last-ditch plan with Congress to raise the U.S. debt ceiling and avert a default that could plunge global financial markets into chaos.

While President Barack Obama insists he is focused on a comprehensive long-term deficit reduction deal, debt talks are stalled and there are just two weeks left until the United States runs out of money to pay its bills.

The vast ideological divide between Obama’s Democrats and Republicans over tax increases and spending on popular social programs has driven a shift in focus in Washington to a backup plan that would give Obama responsibility, and potentially blame, for raising the $14.3 trillion limit on U.S. borrowing.

In the Senate, Democrats and Republicans are working on the fall-back plan proposed by Mitch McConnell, the top Republican in the chamber, that would authorize Obama to raise the debt ceiling in three stages through the November 2012 election.

“We must pursue a fall back or last ditch option if you will and conversations about that have been ongoing,” White House spokesman Jay Carney said.

“We don’t have the luxury anymore of pursuing one (option) only. We have to make sure there is a mechanism in place to be sure that no matter what happens the United States does not default,” he said.

The stalemate on debt talks in Washington, along with debt problems in Europe, is unnerving financial markets worldwide amid fears of a descent into a global crisis. World stocks dipped and gold prices hit record highs above $1,600 an ounce as investors sought a safe haven.

WASHINGTON, July 18 (Reuters) – With five days to go before President Barack Obama’s deadline for a debt ceiling deal and no agreement in sight, Republicans and Democrats on Monday were crafting a fallback plan to avert a U.S. default.

Both parties agree on the need to raise the U.S. debt ceiling, which caps how much the United States can borrow, but are deeply divided along ideological lines over how to do it.

Treasury Secretary Timothy Geithner, however, remained optimistic that a deal was possible.

“Despite what you hear, people are moving closer together,” Geithner, who met with top House of Representatives Republicans on Friday, told CNBC television. “You have seen the leadership of the Republican Party … take default off the table. That’s encouraging.”

But the stalemate in Washington, along with debt problems in Europe, is unnerving financial markets worldwide amid fears that they could spiral into a global crisis. World stocks dipped and gold prices hit record highs above $1,600 an ounce as nervous investors sought a safe haven.

“There’s a perfect storm happening on a global macroeconomic basis with no debt deal here and the ongoing issues in Europe, and the market is looking at all these things and is fairly anxious,” said Oliver Pursche, president of Gary Goldberg Financial Services in Suffern, New York.

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WASHINGTON (Reuters) – With time running short in U.S. debt talks, Republican and Democratic senators sought on Sunday to craft a plan that could avert an unprecedented government default while making modest cuts in the deficit.

Aides to President Barack Obama said he still holds out hope for a “grand bargain” that would combine a deal for up to $4 trillion in deficit reduction with an agreement to raise the country’s borrowing limit.

But there were few signs of progress as the August 2 deadline to avoid a default drew dangerously close.

Behind the scenes, Senate Republican leader Mitch McConnell and Senate Democratic leader Harry Reid were negotiating over a fallback plan proposed by McConnell that would allow Obama to raise the debt limit while sparing Republicans from having to vote in favor of it.

Senior Democratic aides said the Senate will likely begin considering the compromise measure this week. They predicted the Democratic-led Senate would pass the legislation, but winning over the Republican-led House of Representatives would pose a bigger challenge.

“Barring a breakthrough, this is going to be the plan,” one congressional aide said. “We are working under the assumption that there won’t be a (deficit) plan.”

Making the rounds on the Sunday morning talk shows, White House budget director Jack Lew told CNN’s “State of the Union” program he believed that all of the leaders in Congress “understand it would be irresponsible to get to August 2″ and not have a debt-limit increase.

WASHINGTON, July 17 (Reuters) – With time running short in U.S. debt talks, Republican and Democratic senators sought on Sunday to craft a plan that could avert an unprecedented government debt default while making modest cuts in the deficit.

Aides to President Barack Obama said he still holds out hope for a “grand bargain” that would combine a deal for up to $4 trillion in deficit reduction with an agreement to raise the country’s borrowing limit.

But there were few signs of progress as the Aug. 2 deadline to avoid a default drew dangerously close.

Behind the scenes, Senate Republican leader Mitch McConnell and Senate Democratic leader Harry Reid were negotiating over a fallback plan proposed by McConnell that would allow Obama to raise the debt limit while sparing Republicans from having to vote in favor of it.

Senior Democratic aides said the U.S. Senate will likely begin considering the compromise measure this week. They predicted the Democratic-led Senate would pass the legislation, but winning over the Republican-led House of Representatives would pose a bigger challenge.

“Barring a breakthrough, this is going to be the plan,” one congressional aide said. “We are working under the assumption that there won’t be a (deficit) plan.”

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