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How the Senate could kill the budget deal

Senate Minority Leader Senator Mitch McConnell (R-KY) (2nd L), Senate Minority Whip Senator John Cornyn (R-TX) and Senator John Thune (R-SD).
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Senate Minority Leader Senator Mitch McConnell (R-KY) (2nd L), Senate Minority Whip Senator John Cornyn (R-TX) and Senator John Thune (R-SD).

As this column predicted it would, the House this week overwhelmingly passed a budget agreement that would take the threat of repeated fiscal fights and possible government shutdowns off the back of the economy for the next two years.

But now it looks like the deal might not be a sure thing to pass the Senate next week.

This is a major reversal of the recent Washington routine on fiscal fights when the more moderately inclined Senate would pass something with a big bipartisan vote, putting pressure on the Republican House and its restive tea party caucus to follow suit.

This time the House voted 332-94 to approve the bill negotiated by House Budget Committee Chair Paul Ryan, R-Wis., and Senate Budget Committee Chair Patty Murray, D-Wash., that would slice $63 billion off immediate sequester spending cuts, including on the Pentagon, and still achieve a net $23 billion increase in long-term deficit reduction.

(Read more: Don't expect big things from Washington in 2014)

Conventional wisdom initially held that if the bill passed the House, Senate passage would be a breeze. So far it is not working out that way.

Conservative Republicans vowed to filibuster the bill next week meaning Democrats will need at least five GOP senators to break ranks and vote to invoke cloture and move to a vote on final passage.

So far, Sen. John McCain of Arizona is the only Republican to voice support for the bill, noting it spares the military from some of the austerity spending cuts. And many in D.C. were surprised when Sen. Kelly Ayotte, R-N.H., who often sides with McCain and was viewed as likely to vote in favor of the bill, came out strongly against it.

There are still many Republicans who could ultimately support the bill as my POLITICO colleagues Manu Raju and Burgess Everett note, including Rob Portman, Ohio, Lamar Alexander, Tenn., Dean Heller, Nev. and Orrin Hatch, Utah. But there are also complex dynamics working against the bill.

Republican senators are furious over Majority Leader Harry Reid's decision to invoke the "nuclear option" and eliminate the filibuster for most of President Obama's nominees. So they are not inclined to help him in any way with the budget bill.

Meanwhile, unlike in the House, the bill will likely not enjoy the support of Republican leadership. Senate Minority Leader Mitch McConnell faces a tea party primary challenge and conservative groups such as Heritage Action have come out strongly against the deal.

(Read more: White House: Could extend Obamacare deadlines again)

Other GOP senators including Lindsey Graham of South Carolina also face getting ripped by tea party challengers if they vote for the deal. Conservative groups believe the full set of sequester cuts should remain in place. And they do not trust that any long-term deficit reduction through more cuts in Medicare payments to doctors and increased pension contributions from federal employees, among other things, will actually stay in place.

As of now, Democrats hope to hold a cloture vote by Tuesday on the budget agreement, which would then lead to a simple up or down vote on final passage by Wednesday.

At least as of this writing, the cloture vote could fail.

But there are also big risks to Republicans should they kill the budget bill. They would face widespread ridicule and blame for spiking a potentially economy-boosting bipartisan budget agreement and then skipping town for a long Christmas break.

And they could face a backlash from financial markets that very much expect the deal to pass. Failure of the bill in the Senate might not tank markets like the failed TARP vote did in the House in 2009. But it would be a blow to forecasters whose predictions for a better 2014 include a big reduction in fiscal uncertainty.

"For the first time in recent years in Washington, D.C., lunacy has given way to a baby step back towards sanity," Cumberland Advisors Chairman and Chief Investment Officer David Kotok wrote in a note to clients on Friday. "We have a budget deal, albeit a small one. We have a deferral of shutdowns and shocks for at least a year or two."

Indeed most of Wall Street views the budget agreement as a done deal. If it is not, lots of people will have to rethink their rosy scenarios for a Happy New Year.

(Read more: 'You can't shoot for the moon every time': Paul Ryan)

Senate Democrats, meanwhile, remain very confident that they will ultimately get the 60 votes they need to move the bill to final passage, arguing that there are more than enough Republicans who do not face tea party challenges and want to move past the fiscal fights to get the bill passed.

"There are few Republicans right now who want to go on record in support given how bad feelings are" over the nuclear option, one Democratic Senate aide told me. "But we are still feeling very good. It's hard for most people to imagine that Republicans would block this and throw the country into turmoil. We are confident that after some posturing they will find a way to get the votes."

The Democratic aide's prediction seemed to start coming true Friday as more Republican senators signaled they would not support a filibuster including Lisa Murkowksi of Alaska and John Hoeven of North Dakota.

CORRECTION: An original version of this story said that Sen. Bob Corker, R-Tenn., had signaled he would not not support a filibuster to block a budget deal.

—By Ben White. White is POLITICO's chief economic correspondent and a CNBC contributor. He also authors the daily tip sheet POLITICO Morning Money [politico.com/morningmoney]. Follow him on Twitter @morningmoneyben.

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