Updated at 5:45 p.m.
Aides to Senate leaders said Tuesday afternoon that bipartisan talks designed to stave off default and reopen the government had not broken down. Rather, the discussions were on hold as House Republicans weighed a competing offer.
“Talks are on hold until we see what the House is going to do,” a Senate Republican leadership aide told TIME.
“Talks have not broken down,” confirmed a senior Senate Democrat aide, who said negotiations are “on hold while the Senate waits to see what—if anything—the House is able to pass.”
The joint status update offered by aides familiar with the negotiations between Senate Majority Leader Harry Reid, a Nevada Democrat, and Minority Leader Mitch McConnell, a Kentucky Republican, comes as news outlets reported Tuesday afternoon that talks aimed at resolving the budget and debt crises had broken down. “It’s all fallen apart,” Bloomberg quoted Democratic Senator Dianne Feinstein as saying.
The report, which came on the heels of White House Press Secretary Jay Carney’s remark that leaders were “far from a deal at this point,” sent anxious financial markets sliding.
House Republican leaders spent the day cobbling together a new bill, which amounted to a counteroffer to the emerging bipartisan Senate proposal. House Republicans were set to vote on the measure Tuesday night, though Democrats quickly rejected the proposal, which would fund the government through Dec. 15 and let the Treasury borrow money until Feb. 7. Among its provisions, the House GOP bill would end healthcare subsidies for the President, members of Congress, and congressional aides. “The bill that they are talking about is a bill to default,” said House Minority Leader Nancy Pelosi Tuesday after a meeting with President Barack Obama.
Without Democratic votes, it’s not clear whether the House Republican bill has enough support to pass. The outside group Heritage Action said it would encourage members to vote against the measure, putting pressure on the tea party conservative Republicans Speaker of the House John Boehner needs to pass his proposal. Pelosi said no Democrats would support the House bill. House leadership cancelled a vote on the measure after failing to secure the backing of enough conservative Republicans.