U.S. House Speaker John Boehner and other congressional leaders raced to finalize a sweeping two-year budget deal and an extension of the federal debt ceiling until March 2017 before Boehner transfers power to his expected successor, Paul Ryan.
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If successful, the deals would mark a final act for Boehner to clear the decks of some politically divisive legislation as Ryan takes over as speaker - assuming a majority of the House of Representatives votes to put him in the top job in an election set for Thursday.
Boehner is set to retire from Congress on Friday.
No final deal has been reached yet, but House and Senate sources said Democratic and Republican leaders hoped to unveil the package as early as Monday evening.
Senate Majority Leader Mitch McConnell, in remarks on the Senate floor, hinted that a budget and debt limit deal could be imminent.
"We also know that fiscal negotiations are ongoing. As details come in, and especially if an agreement is reached, I intend to consult and discuss the details with colleagues," McConnell said.
By negotiating a two-year budget deal, congressional leaders and the White House may be acknowledging that they will not be able to negotiate a long-elusive deficit-reduction package during Barack Obama's presidency.
The pact under discussion would ease across-the-board spending caps by allowing an additional $80 billion in spending over two years, split evenly between military and domestic programs. About $50 billion in added spending would come in fiscal 2016, which started on Oct. 1, and $30 billion would be added to the fiscal 2017 budget.
Another $32 billion in war funds is also envisioned over the two years.
The added spending could be at least partially offset by savings elsewhere, including measures aimed at improving tax compliance, the Senate source said.
Congress faces a Nov. 3 deadline to extend the U.S. Treasury's authority to borrow, or risk a potential default on federal obligations as cash runs short. The Treasury has already postponed an auction of two-year notes originally scheduled for Oct. 27.
According to a House source, the emerging agreement also would prevent a Medicare Part B premium increase from going into effect, which would be a significant healthcare savings for millions of mostly elderly people.
At a Monday press briefing, White House spokesman Josh Earnest said: "Not everything ... has been agreed to. That means that nothing at this point has been agreed to. We continue to urge Republicans to continue to engage constructively with Democrats to identify common ground."
U.S. borrowing authority would extend to March 2017, weeks after the next president is sworn into office.
Obama will be completing his second and final term in late January 2017. His successor will be elected in November 2016.
Any fiscal deal would have to be approved by the full House and Senate before being submitted to Obama.
Most House Republicans oppose any debt limit increase unless a long-term plan is enacted to bring down deficits and ultimately balance the federal budget. To pass the House, the fiscal deal likely would have to rely heavily on Democratic votes in that chamber.
(Reporting by Richard Cowan; Addditional reporting by David Lawder; Editing by Mohammad Zargham and Leslie Adler)