Default Deadline Looms: Here's Where We Stand (UPDATE: Senate Formally Announces Deal)

UPDATE 3:30 pm ET – Following news that the Senate had come together on an agreement to reopen the government and extend the debt limit, House Speaker Boehner released the following statement:

The House has fought with everything it has to convince the president of the United States to engage in bipartisan negotiations aimed at addressing our country's debt and providing fairness for the American people under ObamaCare.  That fight will continue.

But blocking the bipartisan agreement reached today by the members of the Senate will not be a tactic for us.  In addition to the risk of default, doing so would open the door for the Democratic majority in Washington to raise taxes again on the American people and undo the spending caps in the 2011 Budget Control Act without replacing them with better spending cuts.  With our nation's economy still struggling under years of the president's policies, raising taxes is not a viable option. Our drive to stop the train wreck that is the president's health care law will continue.

We will rely on aggressive oversight that highlights the law's massive flaws and smart, targeted strikes that split the legislative coalition the president has relied upon to force his health care law on the American people.

UPDATE 12:26 pm ET --The U.S. Senate formally announced its plan Wednesday to end the government shutdown and avoid a potentially disastrous default.

"This is not a time for pointing fingers or blame. This is a time for reconciliation," Senate Majority Leader Harry Reid (D-Nev.) said.

The finalized deal would extend the debt limit through Feb. 7, reopen the government and keep it funded through Jan. 15.

The deal would also establish a deadline for budget negotiators to report on their efforts to address the federal debt and place stricter income verification rules on people applying for Obamacare subsidies.

The new Senate deal "provides no relief" for the middle class, Sen. Ted Cruz (R-Texas) said after the announcement was made. He also said he would not block the passage of the deal.

"I have no objections to the timing of this vote," Cruz added, signaling that he won't move to delay or filibuster the passage of the new plan. "There's nothing to be gained from delaying this vote one day or two days."

Sen. Reid made the announcement at the beginning of the Senate session on Wednesday. He thanked Minority Leader Mitch McConnell for helping the senate reach a deal.

“This has been a long challenging few weeks for Congress and for the country," McConnell said. “It’s my hope that today we can put some of the most urgent issues behind us."

[sharequote align="center"]"This has been a long challenging few weeks for Congress and for the country" -- Mitch McConnell[/sharequote]

“After yesterday’s events, the Majority Leader and I began a series of conversations about a way to get the government re-opened and prevent default," he added. "I’m confident we’ll be able to begin to do both those things later today."

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The Senate is finalizing a last-minute deal to reopen the U.S. government and help the Treasury Department avoid defaulting on its payments.

Senate Majority Leader Harry Reid (D-Nev.) and Minority Leader Mitch McConnell (R-Ky.) reportedly hammered out a deal Wednesday and, time permitting, will vote on it later today after the House votes on it first, according to a Republican senator familiar with the situation.

"I understand they've come to an agreement but I'm going to let the leader announce that," Sen. Kelly Ayotte (R-N.H.) said as she went to a meeting to discuss the emerging deal.

As of this writing, there's a deal, Republicans haven't had a chance to review it yet, and no votes have been scheduled.

Senate Majority Leader Sen. Harry Reid, D-Nev., walks to his office after arriving on Capitol Hill on Wednesday, Oct. 16, 2013 in Washington (Credit AP)

The plan many believe to be in the works would extend the debt limit through Feb. 7, reopen the government immediately, and fund the government through Jan. 15, opening the door to having the same exact debt fight all over again.

The deal would also establish a deadline for budget negotiators to report on their efforts to address long-term issues including the federal debt. It may also place stricter income verification rules on people applying for Obamacare subsidies.

“Per Sen sources, [House Speaker John Boehner] has agreed to take up the Senate's plan and allow it to pass with Dem votes,” National Review Online’s Robert Costa tweeted.

The Senate’s efforts come shortly after the House abandoned Tuesday a plan that would have kept the government temporarily funded and extended the nation’s borrowing limit, but also forced members of Congress, their staff and the White House staff enroll in President Barack Obama’s new health care law.

The deal that failed to make it to the House floor Tuesday evening was one of two rejected plans put forward by Speaker Boehner (R-Ohio).

The Speaker’s failure to produce a bill that would pass his chamber most likely means he will have to allow the House to vote on a Senate compromise, which will probably pass with strong Democrat support and perhaps even some support from Republicans.

Congress has been moving with a renewed sense of urgency, perhaps spurred on by the Obama administration’s oft-repeated claim that the Treasury Department would exhaust its borrowing authority come Oct. 17.

"People are so tired of this," President Barack Obama said during an interview Tuesday with Univision.

Lawmakers are also fearful that failure to broker a deal by Thursday would result in a massive hit to U.S. stocks and the global economy.

U.S. stocks are surging Wednesday on news of the deal, showing that at least a few on Wall Street are confident that Congress will come to an agreement:

Still, despite the hopeful note from Wall Street, investors and lawmakers alike were shaken Tuesday when the Fitch credit rating agency announced that it is had placed the United States’ “AAA” credit rating on Rating Watch Negative (RWN). RWN is the step that comes before an actual downgrade.

Meanwhile, John Chambers, chairman of Standard & Poor's Sovereign Debt Committee, said Wednesday morning that a government default would be “much worse than Lehman Brothers.”

Billionaire investor Warren Buffet said he’s fairly confident Congress will figure this out, but if it doesn’t it’ll be a “pure act of idiocy.”

Congressman Steve King (R-Iowa) is also confident the U.S. government won’t default on its bills.

"We are going to service our debt," King said during an interview Wednesday on CNN. "But I am concerned about all the rhetoric around this ... I'm concerned that it will scare the markets."

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The Associated Press contributed to this report. This post has been updated.

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