New Republican fiscal plan, but no agreement yet

WASHINGTON (AP) — President Barack Obama and House Speaker John Boehner continued working toward preventing the U.S. Treasury from a catastrophic default and end a partial government shutdown that stretched into a 12th day.

With the deadline for raising the debt limit and avoiding the default just four days away Saturday, opposition Republicans were softening their tone in the midst of an impasse that has shaken financial markets and idled 350,000 federal workers.

There are two issues at play: the U.S. government has been partially shut since Oct. 1 because of Congress' failure to pass a normally routine temporary spending bill. Separately, Obama wants Congress to extend the government's borrowing authority — another matter that had always been routine — warning that if it fails to do so by Oct. 17, the United States will not be able to pay its bills.

Hopes for a resolution remained high on Wall Street, where investors sent the Dow Jones industrial average 111 points higher following Thursday's 323-point surge.

Obama called Boehner at midafternoon, and Michael Steel, a spokesman for the leader of House Republicans said, "They agreed that we should all keep talking."

Obama also met at the White House for more than an hour with Senate Republicans, the last in a series of four presidential sit-downs with the rank and file of each chamber and each party.

The president has said repeatedly in recent weeks that he is willing to negotiate with Republicans on budget, health care or other issues, but only after the government is reopened and, separately, the $16.7 trillion debt limit is raised.

Republicans had been insisting on cuts to Obama's signature health care law and other programs as the price for reopening government and extending the debt limit past next Thursday's deadline.

With polls showing that the impasse has inflicted damage to their party, Republicans in the House and Senate softened their tone, and separately made proposals to the White House for ending the deadlock.

Each offered to reopen the government and raise the debt limit — but only as part of broader approaches that envision deficit savings, changes to the health care law, and an easing of spending cuts that the White House and Congress both dislike. The details and timing differed.

"Let's put this hysterical talk of default behind us and instead start talking about finding solutions," said Senate Republican Leader Mitch McConnell.

Jay Carney, the president's press secretary, said Obama "appreciates the constructive nature of the conversation and the proposal that House Republicans put forward. And yet, the spokesman said, "He has some concerns with it."

In Congress, the man certain to be involved in any final agreement, Senate Majority Leader Harry Reid, gave no indication of his plans.

In meetings with lawmakers over two days, Obama left open the possibility he would sign legislation repealing a medical device tax enacted as part of the health care law. Yet there was no indication he was willing to do so with a default looming and the government partially closed.

The White House and Republicans have negotiated almost $4 trillion in deficit savings in the past three years. But little of that has come out of benefit programs such as government insurance for the poor and the elderly. The current Republican proposals seemed an attempt to open up that part of the budget to scrutiny.

After four years of trillion-dollar deficits, the 2013 federal budget shortfall is expected to register below $700 billion, but Republicans say more cuts are essential. At the same time, the nation's debt is rising inexorably — the reason for the effort to raise borrowing limit to cover it. The debt was $10.6 trillion when Obama took office during the worst recession in decades, and has grown by $6.1 trillion in the years since.

The shutdown, meanwhile, sent ripples nationwide.

The aerospace industry reported that furloughs at the Federal Aviation Administration have resulted in a virtual stop to certification of new aircraft, equipment and training simulators.

The Senate passed legislation instructing the Pentagon to permit military chaplains to conduct worship services. House approval was still needed.

And Keith Colburn, a crab fisherman, told lawmakers during the day that a lucrative, one-month crab harvest set to begin Oct. 15 in the Bering Sea is in jeopardy because the National Oceanic and Atmospheric Administration is not assigning quotas to boats.

But lawmakers seemed to be taking care of their own needs.

The members-only House gym remained in operation, and enough Senate staff was at work to operate the aging underground tram that ferries senators and others from the Russell Office Building to the Capitol a short distance away.