Where things stand

The afternoon didn’t unfold exactly as planned — in this mess, nothing ever seems to go as planned — but as Sunday winds down, there’s no end in sight to the Republican-generated crisis.

With markets waking, House and Senate leaders worked through the weekend, trying to overcome the distrust between them and to find a path around default, just eight days away now and counting.

Going into Sunday night, no final agreement had been reached, but House Speaker John Boehner was still pursuing a two-stage, $3 trillion-plus package that would raise the debt ceiling in increments, by $900 billion first and then by about $1.6 trillion next year.

Senate Majority Leader Harry Reid (D-Nev.) is stepping up, preparing his own creative plan.

Mr. Reid, the Senate’s top Democrat, was trying Sunday to cobble together a plan to raise the government’s debt limit by $2.4 trillion through the 2012 election, with spending cuts of about $2.5 trillion. He would seek to avoid cuts to entitlement programs, but it was unclear how those savings would be achieved.

Notably, the plan does not currently contain any new or increased taxes, an approach that many in his caucus would probably balk at.

At first blush, it may sound crazy that Reid would present a “compromise” with $2.5 trillion in cuts with no additional revenue — in effect, a plan that could have been crafted by Republicans weeks ago — but in Reid’s defense, it’s worth emphasizing that the Majority Leader probably counts half of those savings (at least) from ending the wars in Iraq and Afghanistan.

In general, Republicans don’t consider cuts to be cuts unless working people are suffering in some direct way, so his approach isn’t likely to go over well, but if GOP officials want a $2.5 trillion plan with no revenues, Reid is prepared to give them one. Add it to the list of possible ways out.

Reid and House Minority Leader Nancy Pelosi met with President Obama for about an hour in the Oval Office this evening. No word yet on how their discussion went.

And in the meantime, Wall Street is gearing up for a very busy morning.

U.S. stock futures fell, indicating the Standard & Poor’s 500 Index will slump after rallying within 1.4 percent of a three-year high, as President Barack Obama and Congress failed to reach an agreement on raising the federal debt limit, intensifying concern of a default.

S&P 500 futures expiring in September declined 0.8 percent to 1,330.50 at 8:42 a.m. in Tokyo. Dow Jones Industrial Average futures lost 103 points, or 0.8 percent, to 12,518.

I’d note for context that the Dow Jones Industrial Average and the S&P 500 both closed at roughly at three-year highs on Friday. Republicans will likely wipe out those gains very quickly.