Senate Votes Down Clean 2014 Debt Extension Along Party Lines As Democrats Reject Collins' Plan

As was largely expected, the Senate cloture vote to extend the debt ceiling through the end of 2014, has failed to pass along party lines, or 53-45.

Hardly a ringing endorsement that negotiations in the Senate are running any more smoothly than in the House.

Following the vote, the Senate goes into recess and Democrats are going into a private meeting even as Reid has said he will reject McConnell's offer which is contingent on negotiations. From Politico:

Democratic leaders in the Senate are rejecting an offer by Sen. Susan Collins (R-Maine) to end the budget impasse, arguing it asks for too much in return for too little, senators and aides tell POLITICO.

 

The development comes on the same day that the Senate voted 53-45 to block a Democratic bill that would raise the debt ceiling through 2014 without any spending cuts or changes to Obamacare.

 

The Collins plan, which was drafted with input from West Virginia Sen. Joe Manchin (D) and other senators, called for a six-month extension of government funding and a debt limit increase through January. But it asked for a delay in Obamacare’s medical device tax for two years and a requirement for income verification for Obamacare subsidies.

 

While it would give federal agencies more flexibility to work within the constraints of the automatic sequestration cuts, Democrats objected to the level of funding that Collins was seeking, which would lock-in the levels under the sequester at $967 billion next year, far too low for many Democrats.

 

Moreover, Democrats are calling for a longer-term budget deal that would raise the debt ceiling and extend government funding. And they said that agreeing to a shorter-term budget deal and a lower funding level — with a handful of changes to Obamacare — was asking too much after they have called for a “clean” increase to the $16.7 trillion national debt ceiling and a stop-gap measure to keep the government running.

 

This means that there is little time for the two sides to reach a deal — and the talks may now shift to Senate Majority Leader Harry Reid and Senate Minority Leader Mitch McConnell to try to find a way out of the crisis now that the House Republicans have hit an impasse with the White House. Reid and McConnell met Saturday morning.

And now, with the House Republicans out of the negotiation as Harry Reid noted previously, the final chance is that Senate Republicans and the White House/Democrats finds some common ground a la the Fiscal Cliff negotiation.

It appears that any hope of a Monday morning resolution has just been dashed, and once again it will be up to the wire, or perhaps beyond it (if Goldman's observations that 2013 is different), depending on just how much of a motivating factor the market is.