Source: The Wall Street Journal

WASHINGTON—Senate leaders on Wednesday struck an 11th-hour agreement to avoid a U.S. debt crisis and fully reopen the federal government, putting lawmakers on track toward ending a stalemate that worried investors world-wide and provided striking evidence of congressional dysfunction.

House Speaker John Boehner (R., Ohio) has said he would bring whatever deal the Senate crafts to the floor of the House, where Republicans on Tuesday had tried and failed in their own last-minute effort to unify behind a proposal to end the impasse. The Senate deal gives GOP lawmakers almost none of the policy gains they had sought, but enough House Republicans are expected to join with Democrats in order to pass the measure.

It was unclear when each chamber would vote, but some lawmakers said the Senate agreement could clear both chambers on Wednesday.

House GOP leaders were contemplating taking up the expected deal from the Senate for a vote later in the day, according to aides from both parties. That would send the bill to the Senate in a fashion enabling the Senate to skip some of its time-consuming procedures to ensure a quicker final vote.

The Senate plan, announced by leaders as the Senate opened its session, would fund federal agencies at current spending levels through Jan. 15 and extend the nation’s borrowing authority through Feb. 7. A negotiating committee would separately be charged with devising plans for longer-term fiscal solutions.

“The compromise we reached will provide our economy with the stability it desperately needs,” Senate Majority Leader Harry Reid(D., Nev.) said on the Senate floor. Senate Republican Leader Mitch McConnell (R., Ky), also spoke, saying he was confident the deal would end the budget stalemate on Wednesday.

Senate leaders from both parties raced to complete a deal and put it to quick votes. Lawmakers are hopeful both the House and Senate will vote by the end of the day Wednesday, avoiding a cash crunch at the U.S. Treasury and reopening the government, which has been partially closed for 16 days.

Lawmakers have viewed Thursday as a landmark moment. The Treasury says that on that day it will exhaust its emergency borrowing powers and be left with only about $30 billion to pay the nation’s bills, enough to last for a week or two.

If all 100 senators agree, the bill could potentially come to a final vote in the Senate later Wednesday. Sen. Ted Cruz (R., Texas), who has led a charge against the 2010 health-care law that led to the government shutdown, said he would vote against the bill but wouldn’t prevent it from coming to a quick vote, a sign the measure could quickly move in the Senate.

As part of the deal, senators agreed to not prevent the Treasury Department from using emergency measures to avoid default in the future, a big win for the White House that will have implications the next time Congress debates whether to raise the country’s borrowing limit, congressional aides said.

The Senate agreement also includes no major alterations to the 2010 health-care law. But the deal will include one minor change sought by Republicans, setting new procedures to verify the incomes of some people receiving government subsidies for health-insurance costs.

The Senate deal outlines a specific set of steps for adjusting the nation’s borrowing limit. Under the Senate deal, the president would be granted authority to suspend the debt ceiling. Within 15 days, he would submit a request to Congress to lift the debt ceiling through Feb. 7.

Congress would be able to vote on a motion to disapprove the increase, which Mr. McConnell would likely bring to the Senate floor, according to GOP aides, but Senate Democrats would likely be able to defeat the measure. Because Treasury officials would retain some flexibility with the debt ceiling, the new debt deadline might not be reached until March 2014, aides said.

Negotiators rejected a Democratic proposal to delay for one year a fee of $63 per insured person levied on groups that offer health policies, including employers, labor unions and insurance carriers—a fee opposed by many large employers and unions.

The setback in the House on Tuesday was the result of pressure from conservatives, who objected both to the Senate bill and Mr. Boehner’s alternative because they gave Republicans too little of what they had been demanding. Conservatives have been pressing for major changes in the 2010 health-care law and measures to reduce the deficit.

GOP leaders had tried to build backing by including proposals sought by conservatives, including one that would cut government health-insurance benefits for congressional and administration officials, including their staff, under the 2010 health-care law.

The bill met powerful headwinds when the conservative political group Heritage Action on Tuesday evening announced its opposition and said votes on the measure would be included in the group’s influential ratings of lawmakers.