WASHINGTON - US Senate leaders announced a deal on Wednesday to end a political crisis that partially shut down the federal government and brought the world's biggest economy close to a debt default that could have threatened global financial calamity.
The deal, however, offers only a temporary fix and does not resolve the fundamental issues of spending and deficits that divide Republicans and Democrats. It funds the government until January 15, so Americans face the possibility of another government shutdown early next year.
US stocks surged, nearing an all-time high, on news of the deal, which must still be approved by vote in the Senate and the House of Representatives. But trading volumes remained low, underscoring how the political brinkmanship in Washington has unnerved Wall Street.
A stand-off between Republicans and the White House over funding the government forced the temporary lay-off of hundreds of thousands of federal workers from October 1 and created concern that crisis-driven politics was the "new normal" in Washington.
Senator John McCain, whose fellow Republicans triggered the crisis with demands that President Barack Obama's signature "Obamacare" healthcare law be defunded, said on Wednesday the deal marked the "end of an agonizing odyssey" for Americans.
"It is one of the most shameful chapters I have seen in the years I've spent in the Senate," said McCain, who had repeatedly warned Republicans not to link their demands for Obamacare changes to the debt limit or government spending bill.
House Speaker John Boehner said Republicans in the House would not block the Senate plan. Both chambers were expected to vote later in the day, clearing the way for Obama to sign it into law before Thursday, when the Treasury says it will exhaust its borrowing authority.
The deal would extend US borrowing authority until February 7, although the Treasury Department would have tools to temporarily extend its borrowing capacity beyond that date if Congress failed to act early next year. The deal would fund government agencies until the middle of January.
The agreement includes some income verification procedures for those seeking subsidies under the healthcare law, but Republicans surrendered on their attempts to include other changes, including the elimination of a medical device tax.
With Republicans in the House of Representatives divided on the way forward, White House spokesman Jay Carney said "we are not putting odds on anything" when asked about a House vote on the Senate plan.