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Tieng Anh Vui
The debt ceiling explained in 90 seconds
The US Senate is expected to take up a bipartisan bill to raise the debt limit and reopen the US government, just a day before a critical deadline.
Senate leaders worked through Tuesday night to craft a deal that could also win support from a bipartisan coalition in the House of Representatives.
Amid the congressional disarray, a top ratings agency warned of a possible downgrade in US creditworthiness.
The US must raise its $16.7tn (£10.5tn) debt limit by Thursday or risk default.
Politicians, bankers and economists have warned of global economic consequences unless an agreement can be reached.
"People are so tired of this," US President Barack Obama, who has refused to yield to Republican efforts to exact policy concessions during the fight, said on Tuesday in an interview with Los Angeles TV station KMEX.
The Democratic-controlled Senate took control on Tuesday night after an effort by the Republican leadership of the House of Representatives to put forward their own last-minute plan collapsed.
'Deadbeat nation'
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To the bystander (and unfortunately none of us can really be dispassionate bystanders on this, because if the dollar goes pop, we're all covered in goo), what's going on looks odd”
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Senate Democratic leader Harry Reid and his Republican counterpart, Mitch McConnell, were expected to brief their colleagues on Wednesday.
Their plan reportedly would extend the federal borrowing limit until 7 February and fund the government to mid-January, and would include relatively minor changes to Mr Obama's signature healthcare law.
The Senate is due to reconvene at noon (16:00 GMT), and if the leaders do strike a deal, the first votes could come later on Wednesday.
But even if a compromise can overcome Senate procedural hurdles, it remains unclear whether it can muster enough votes in the Republican-led House to pass before the 17 October deadline.
US media reaction
The Wall Street Journal writes: "None of this is worth a partial government shutdown, much less the risk of a debt default, and both sides are looking like losers."
The New York Times urges an end to "debt-ceiling moments", making them "less fraught with peril, less prone to stalemate and more conducive to productive negotiations".
The Republicans, says The Washington Post, seem "determined to thrash about in search of something it can call a political win for a few more hours, or days".
The Los Angeles Times compares the Republican leaders of the House and Senate saying the latter, Mitch McConnell, has been able to "discern when his party is holding a losing hand and make the decision to cut a deal".
Democratic Senator Barbara Mikulski warned her colleagues that the US was "hours away from becoming a deadbeat nation, not paying its bills to its own people and other creditors".
As the Senate deal took shape on Monday and Tuesday, the Republican leadership in the House of Representatives floated last-ditch proposals aimed at asserting their voice in the negotiations.
But the House leadership team, fronted by Speaker John Boehner, saw its proposals rejected by the Republican rank-and-file as being insufficiently conservative in nature.
The Senate plan, should it pass that chamber on Wednesday, could then pass the House, with most of the Democratic caucus joined by a smaller number of more moderate Republicans, analysts say.
Amid the legislative turmoil, the Fitch credit agency warned it could downgrade the US government's AAA rating, while the Dow Jones index ended the day down 133 points.
On Tuesday afternoon, President Obama told a local ABC broadcaster he expected the debt ceiling impasse would be resolved.
US Treasury payments due
23 October: Social Security benefits $12bn
28 October: Federal employee salaries $3bn
30 October: Medicaid payments to providers $2bn
31 October: Interest payment on public debt $6bn
1 November: Medicare payment to providers & plans $18bn; Social Security benefits $25bn; military active pay, retirement and veteran benefits $12bn; supplemental security income benefits $3bn
14 November: Social Security benefits $12bn
15 November: Interest payment on debt $29bn
Note: These are the key payments, not all the payments, the US Treasury must make in the next month
But he added: "I think the House Republicans still believe they can get concessions for doing their job."
Hardline conservatives triggered the budget warfare 16 days ago, forcing the first government shutdown in 17 years by demanding that Mr Obama gut his signature healthcare overhaul plan.
By Tuesday afternoon, the House leadership was left offering a relatively modest proposal to deny discounts for lawmakers and their staff members on health insurance policies.
In the Senate plan under negotiation, Republicans may only emerge with a sop in the form of language tightening income verification for anyone seeking subsidies on medical coverage.
The Senate plan would also set up a conference committee between it and the House that would be tasked with drawing up a longer-term budget deal.
'That's it?'
Although both parties have fared badly in opinion polls during the fiscal standoff, Republicans have taken the brunt of the blame from voters.
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As America stands on the brink of running out of money to pay its bills, the Republican leadership in the House raised pointless grandstanding to an art form”
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And with concerns about potential damage to the party's prospects in next year's midterm elections, the political recriminations have already begun.
Moderate Republican congressman Peter King told the Huffington Post: "After shutting down the government for two-and-a-half weeks, laying off 800,000 people, all the damage we caused, all we would end up doing was taking away health insurance from congressional employees. That's it? That's what you go to war for?"
Senator John McCain, who was the Republican 2008 presidential nominee, was quoted by the New York Times as saying: "Republicans have to understand we have lost this battle, as I predicted weeks ago, that we would not be able to win because we were demanding something that was not achievable."
The White House has refused to negotiate over its healthcare law, pointing out that it passed in 2010, was subsequently validated by the Supreme Court, and was a central issue in the 2012 presidential election, which Mr Obama won comfortably.
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