Reid: Cautiously optimistic on debt limit deal

By LAURIE KELLMAN | July 31, 2011 | 12:28 PM EDT

Senate Majority Leader Sen. Harry Reid, D-Nev., speaks during a news conference on debt ceiling legislation on Capitol Hill on Saturday, July 30, 2011, in Washington. The GOP-controlled House rejected Reid's debt-ceiling proposal in a largely symbolic vote. (AP Photo/Evan Vucci)

WASHINGTON (AP) — Senate Majority Leader Harry Reid says he's cautiously optimistic that President Barack Obama and congressional lawmakers will come to a deal on raising the debt limit. But the Nevada Democrat emphasizes that no agreement has been reached.

Reid's Republican counterpart, Sen. Mitch McConnell, also says that negotiators are close to an agreement.

The Senate takes a test vote at 1 p.m. Sunday to move the debate forward.

The nation begins running out of money to pay all its bills on Aug. 2 if no agreement is reached on the borrowing limit. The failure of talks could be devastating to the nation's economy.

Congressional leaders of both parties have tried to reassure the financial markets that they will beat the deadline and avert a first-ever default.