Senate shelves Reid bill as final debt-ceiling plan comes into focus

The Senate failed to advance debt-ceiling legislation moved by Senate Majority Leader Harry Reid, even as lawmakers say progress is being made on a final agreement that they hope can pass before the Aug. 2 deadline to avoid a federal default.

The vote, initially planned for late Saturday, ultimately proved inconsequential, with leaders working to agree on terms of a new plan. The Senate could return to vote on it Sunday evening if an agreement is reached.

“We’re cautiously optimistic,” Reid said earlier of talks with his Republican counterpart, Mitch McConnell of Kentucky. But he added: “As we know, one problem can stop the whole agreement from going forward.”

Reid said he’s also spoken with Vice President Joe Biden, who is playing a key role in the frenetic final days before the nation could lose the authority to continue borrowing money to pay its bills.

The discussion centers on a $3-trillion package that includes cuts in discretionary spending, capping future spending and a vote on a balanced budget amendment. A special joint committee would be formed to consider further cuts and entitlement reforms that could be considered in Congress this fall.

The debt ceiling would be raised until after the 2012 presidential election -- a key priority for Obama.

House Speaker John Boehner was to hold a conference call with fellow Republicans later Sunday to discuss that framework and gauge support. McConnell may also meet with the full Senate Republican conference.

“This deal has not been finalized but I think we’re very, very close to something I could comfortably recommend to my members, and I believe the Democratic leadership will be doing the same,” McConnell said earlier Sunday on CBS’ “Face The Nation.”

But White House communications director Dan Pfeiffer tweeted after the vote that, “despite all the reporting, no deal has been reached” and that there were “still [important issues to work out].”

Added a House leadership aide: “Discussions are moving in the right direction, but serious issues remain. And no agreement will be final until Members have a chance to weigh in.”

Lawmakers need to act by Tuesday to ensure that the government continues to meet its obligations. Senior advisor David Plouffe said that if that final plan cannot be moved by then, the president would be open to signing a temporary debt-ceiling increase.

Lisa Mascaro, Kathleen Hennessey and Peter Nicholas contributed to this report.