AP
Senate Republican leader Mitch McConnell speaks at a news conference on Capitol Hill in Washington July 30.
Washington – Senate leaders scrambled to finalize an emerging compromise on the debt ceiling Sunday, with pressure building to produce a bill that can somehow sail through both chambers in the next two days.
Congress is running out of time for do-overs, with lawmakers facing an Aug. 2 deadline to either raise the debt cap or face the possibility of default.
The Senate, after voting against House Republicans' proposal Friday night, effectively killed Democratic Leader Harry Reid's counterproposal Sunday afternoon. Sixty votes were required to advance the proposal, and it fell far short in a 50-49 roll call. While the test vote was expected to fail, the outcome stressed how important it is for the latest round of talks to produce a viable alternative.
Senate Democratic Whip Dick Durbin, D-Ill., said talks are proceeding at a furious pace, with Vice President Biden deeply involved.
Reid said he was "cautiously optimistic," ahead of a meeting with House and Senate Democratic leaders. Senate Republican Leader Mitch McConnell said lawmakers are "really, really close to an agreement."
But officials also said negotiators are not finished, and party leaders still need to talk over some of the details with their rank-and-file. Tea Party-aligned lawmakers may not be happy with some of the provisions in the new framework, and, on the other side, liberal groups were already raising alarm about the possibility of entitlement cuts.
Still, Reid said: "We're hopeful and confident it can be done."
Durbin and Jon Kyl, R-Ariz., the No. 2 senators in their respective parties, also said on "Fox News Sunday" that they were feeling better about the discussions.
"I have a much more positive feeling than I did 24 hours ago," Durbin said.
Though White House senior adviser David Plouffe cautioned there's no deal yet, Senate leaders are in dire need of a compromise.
Reid won over just one Republican supporter, Massachusetts Sen. Scott Brown, for his bill Sunday afternoon. On the Democratic side, he lost Nebraska Sen. Ben Nelson, West Virginia Sen. Joe Manchin, and Vermont Sen. Bernie Sanders, an independent aligned with Democrats.
Lawmakers have until Aug. 2 to raise the $14.3 trillion debt ceiling. The Obama administration says that after Tuesday, the Treasury can no longer pay all of America's bills.
"There's no question we're approaching the final hour," Gene Sperling, director of the National Economic Council, told "Fox News Sunday."
Sources said the tentative arrangement between the White House and Republicans closely resembles the plan first proffered by House Speaker John Boehner before he modified it to appease Tea Party conservatives.
Sources said the debt ceiling would be raised by as much as $2.4 trillion, with a roughly equal amount of deficit-reduction. Though sources said the debt-ceiling increase would be split into two parts, Congress would have to meet a very high threshold to stop it -- likely assuring President Obama an increase that lasts until early 2013, as he requested.
The plan would immediately cut spending by about $900 billion over the next decade, and then task a commission to recommend another set of cuts that would, taken together, add up to the size of the debt-ceiling increase.
Importantly, a "trigger" in the proposal would automatically enact across-the-board cuts to Medicare, defense and other areas if the committee's recommendations are not approved by the end of the year.
One source familiar with the talks noted that while the Medicare cuts would be capped, defense cuts would not and would make up roughly half of the total cuts. This mechanism could help compel Republicans avoid the "trigger" entirely by working through the commission to achieve deficit reduction.
But the framework of the deal floated perilously between the alternatives pushed by House conservatives and Senate Democrats.
The tentative plan would have Congress vote on a balanced-budget amendment -- a key demand of Tea Party-aligned Republicans -- but would not require Congress to approve it in order for the debt ceiling to be raised.
Top aides to House GOP lawmakers told Fox News they were concerned about the emerging deal. One source said it could be difficult to bring House conservatives back on board with such a plan.
At the same time, the tentative arrangement is closer to Boehner's original bill than Reid's.
The partisan makeup of Congress makes the task of striking a deal that much more complicated.
Neither party controls a supermajority in the Senate, making it necessary to attract bipartisan support in order to pass a bill.
Republicans hold a broad majority in the House, but conservatives may be skeptical of any deal that has too many Democratic fingerprints on it from the Senate side.
House Republican Whip Kevin McCarthy, R-Calif., told "Fox News Sunday," that the talks were moving in the "right direction" but that House Republicans would "have to look at the details."
One source suggested that Boehner could change course and corral a coalition of Republicans along with a larger batch of Democrats -- though that would put the speaker in a difficult position within his own caucus.
Fox News' Mike Emanuel, Chad Pergram, Trish Turner and Ed Henry contributed to this report.
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