Updated Oct. 11, 2013 9:01 p.m. ET
WASHINGTON—President Barack Obama on Friday began working aggressively with House and Senate Republicans to shape a deal to raise the debt ceiling and fully reopen the federal government, signaling a quickening pace in discussions to end a political stalemate that risks a U.S. debt crisis.
The White House rejected a core part of a proposal from House Republican leaders that would extend the nation’s borrowing authority for six weeks if the president committed to deficit-reduction negotiations. Instead, Mr. Obama signaled that he wants a deal that raises the debt ceiling for a longer period and creates a longer-term forum for budget talks.
GOP senators wait Friday at the Capitol for a bus to the White House for a meeting with President Obama. Win McNamee/Getty Images
A proposal crafted by Senate Republicans, which has drawn interest from some Democrats, emerged as the likelier avenue for reaching an agreement. It included a longer extension of borrowing authority—through January—and an explicit agreement to reopen the government.
The developments set the stage for a weekend of negotiations and calculations about whether Mr. Obama could fashion an agreement on his own terms that could also pass the GOP-led House. They came as the government remained partially closed for an 11th day and amid fears of a debt crisis.
The Treasury says lawmakers must raise the debt ceiling this month so that all of the nation’s bills can be paid. On Oct. 17 the Treasury says it will exhaust its emergency measures and be left with about $ 30 billion, which could run out in a week or two.
Global financial leaders—with the agreement of the Obama administration—on Friday urged the U.S. government to get its fiscal act together before its budget battles derail the world economy. The U.S. “needs to take urgent action to address short-term fiscal uncertainties,” said a communiqué released by the Group of 20 industrialized and developing economies.
Senator Ted Cruz (R, Texas), right, arrives with other members of the Senate Republican Caucus for a meeting with President Barack Obama at the White House in Washington on Friday. Reuters
The day’s events showed how the House Republicans’ position has become substantially weakened in recent weeks, and how thoroughly Mr. Obama had gained the upper hand.
Republicans headed into the fall’s budget battle gunning for the president’s most important legislative initiative, willing to allow a government shutdown in order to defund or undercut the 2010 health-care law.
By this week, however, Republican demands were a shadow of their former ambitions. Their proposal included a six-week increase in the debt limit, with no GOP policy priorities attached, in exchange only for a promise from Mr. Obama to engage in budget negotiations.
The events also marked a shift for Mr. Obama, who for weeks had said he wouldn’t negotiate details of any deal until Congress raised the debt ceiling and fully reopened the government without GOP policy conditions. That stance changed this week as the president met separately with each party’s House and Senate caucus, and on Friday he signaled his preferences more directly to lawmakers.
Those meetings left Mr. Obama with two options for pursuing an agreement, one from House Republican leaders, and one from Senate Republicans.
The House GOP plan did not appear to lay out a clear path to reopening the government. It linked the six-week extension of borrowing authority with budget talks, in which the GOP would push for a number of deficit-reduction proposals, among them means-testing Medicare, slowing the growth of benefits for Social Security and adopting a framework for altering the tax code, according to GOP aides.
On Friday afternoon, the White House didn’t flatly reject the proposal, but said Mr. Obama had concerns with a major element of it.
In particular, White House spokesman Jay Carney said, tying a six-week extension of the debt limit to budget negotiations is “not the appropriate way to go,” because it would create the same dynamic that has led to the current stalemate. Mr. Obama phoned House Speaker John Boehner (R., Ohio), and the two agreed to continue discussions, Mr. Carney said.
WSJ’s Janet Hook explains that matters are so dire in Washington that the idea of pushing off the debt ceiling by six weeks — even as the government remains closed — is considered big progress these days.
Senate Republicans who met with Mr. Obama on Friday said he suggested he was looking for a plan that extended the debt ceiling for longer than the six weeks in the House plan, and which created a venue for negotiating a broader fiscal accord not linked with the debt-ceiling discussion.
“He is very concerned about having the debt limit taken care of—but he’d like a long-term debt limit,” said Sen. Orrin Hatch (R., Utah).
In the absence of a breakthrough with the House, attention turned to negotiations quietly conducted in the Senate’s backrooms. A group of Republicans has been working with Democrats to devise an alternative route to compromise that could link the reopening of the government with a debt-limit increase that would extend borrowing authority longer than in the House plan.
A bipartisan group of about 10 lawmakers, roughly split between Democrats and Republicans, met in Maine GOP Sen. Susan Collins’s office on Friday to refine the plan. It would extend the borrowing limit through the end of January and reopen the government through March at current spending levels.
The bill also would grant more flexibility for agencies to manage budget cuts known as the sequester, according to a Senate aide with knowledge of the talks.
The proposal would immediately start negotiations over a longer-term budget, with a requirement to produce a report by mid-January.
With the government shutdown heading into a third week and the debt ceiling deadline approaching, Congress could be warming to a short-term deal to avoid default. But has the GOP, blamed for the dysfunction, already done long-term damage to itself.
It also would include measures relating to the health law: a two-year delay in a tax on medical devices intended to help fund the law, and income-verification measures designed to prevent fraud among people receiving government subsidies to help pay for health-insurance premiums.
Those provisions could help win support from Republicans who have tried to curtail the health law. Senate Democratic leaders haven’t backed the plan at this point, an aide said.
Ms. Collins said she presented her plan to Mr. Obama in their Friday meeting and said he didn’t immediately reject or embrace it.
“The president is now indicating a willingness to negotiate that was not there previously, and I think that represents progress,” she said in an interview.
If Mr. Obama moves more directly to working with the Senate, he will raise questions about whether any deal he strikes can marshal a majority in the House.
House Republicans have so far shown little interest in the Collins plan. “We’re working on something else,” said House Budget Committee Chairman Paul Ryan (R., Wis.), when asked about the Senate proposal.
—Siobhan Hughes, Kristina Peterson and Carol E. Lee contributed to this article.