House Republicans, White House Begin Talks on Temporary Debt Hike Plan

October 11, 2013 12:51 AM
 

via a special arrangement with Informa Economics, Inc.

But issues linger as Senate Dems insist gov't be reopened before signing off on any short-term debt limit hike


NOTE: This column is copyrighted material, therefore reproduction or retransmission is prohibited under U.S. copyright laws.


House Republicans after meeting late Thursday with President Barack Obama said staff discussions would continue into the night, creating the potential of a breakthrough in the fiscal standoff that has partially shut the federal government and threatens a damaging government default. "He didn’t say yes, he didn’t say no. We’re going to continue negotiating this evening," said House Budget Chairman Paul Ryan (R-Wis.), who helped draft the House GOP proposal for a six-week debt limit increase so negotiations could be held on a bigger deal.

The GOP plan did not include a Fiscal 2014 stopgap spending proposal, but House Armed Services Chairman Howard "Buck" McKeon (R-Calif.) said adding one to the package is "one of the things we’re talking about."

President Obama said he wanted the government reopened. "What we’re trying to do is find a way to quickly settle the CR (Continuing Resolution) crisis so that we can pass a CR and stop the shutdown," he said.

A statement from House Speaker John Boehner (R-Ohio) said "No final decisions were made; however, it was a useful and productive conservation. The president and leaders agreed that communication should continue throughout the night."

White House Press Secretary Jay Carney said Thursday afternoon that Obama would sign a debt limit extension if no partisan strings are attached to it, but the administration is waiting to see the details of the offer.

Boehner told Republican lawmakers the plan effectively decouples the debt limit issue from a stopgap spending plan (HJRes 59) so the GOP can continue to fight for concessions in exchange for a continuing resolution. So the plan does nothing to immediately reopen the government, and leaves the prospect that it could remain shuttered until Thanksgiving, if a deal can’t be struck by then.

But Boehner said the talks could also include a discussion of reopening the government. Boehner, asked about his conditions for reopening the government, said: "I don’t want to put anything on the table. I don’t want to take anything off the table," he said.

Entitlement reform, tax reform. House Appropriations Chairman Harold Rogers (R-Ky.) said the price of the debt ceiling increase would be "an agreement, along with the Senate, that we’ll be able to discuss these other issues such as the CR but also entitlement reform, tax reform and so on."

Of note, the six-week debt limit increase would preclude the Department of Treasury’s ability to use its extraordinary measures once the deadline hits. That means Treasury could not extend the country’s borrowing capacity beyond the time allowed in the legislation.

Some moderate Republicans who have been pushing Boehner to put a clean CR on the floor to reopen the government are uncomfortable with the plan because it would not reopen the government.

Importantly, Ryan said earlier Thursday morning he intends to go to conference on the budget resolution, something Democrats have been urging for months. "We’re gonna start negotiations," Ryan said. "As you know, a budget resolution is not sufficient to do all that we need to do, but it’s a step in the right direction."

It is unclear whether the president and Senate Democrats will agree to the plan.

A readout of the meeting distributed by the White House said, "After a discussion about potential paths forward, no specific determination was made. The President looks forward to making continued progress with members on both sides of the aisle. The President's goal remains to ensure we pay the bills we've incurred, reopen the government and get back to the business of growing the economy, creating jobs and strengthening the middle class."

"I just don't see how you can ignore the fact that the government is shut down," Sen. Susan Collins (R-Maine) said, adding that the Senate could take up the bill after it passes the House and instead use it as a vehicle for a more comprehensive plan that would not only address the appropriations impasse but would also repeal the tax on medical device companies. "And then we'll see what happens," she said. Senate Minority Leader Mitch McConnell (R-Ky.) is pushing that alternate plan from Collins. A proposal from Collins to reopen the federal government and raise the debt ceiling provides hints at what is being considered in ongoing talks between the GOP and White House. Collins’ plan was part of negotiations among Republicans Thursday afternoon, including sessions held in the office of Minority Leader Mitch McConnell (R-Ky.). Along with reopening the government and raising the debt limit, it would give federal agencies flexibility to deal with the decade-long automatic spending cuts known as sequestration during the next two years. Collins’ proposal would repeal or delay the 2.3 percent medical device tax under the Affordable Care Act. The proposal would replace the revenue lost from the repeal or delay with so-called "pension smoothing," a strategy that would allow private businesses to lower their pension contributions in the near future in exchange for higher payments down the line. The plan would also call for income verification for those receiving benefits under the health care law.

Senate Democrats declined to endorse the short-term debt limit extension because they said they had yet to see a definitive legislative text. Senate Majority Leader Harry Reid (D-Nev.) said that not only would negotiations not happen without reopening the government, but that he was continuing to wait on Boehner's proposal. Of note, Reid filed for cloture on a bill that would just raise the debt limit, setting up a potential Saturday vote on whether to proceed to the measure.

 

While House Republicans had hoped to vote on their plan today, no legislative text was posted by late Oct. 10.

Lew warns of consequences. In terms of market indicators, interest rates on four-week Treasury bills tripled in the past week to their highest levels since the 2008 crash in financial markets. "Every week, we roll over $100 billion of Treasury bills, and that relies on the market being open and willing to function," Treasury Secretary Jacob Lew said. "I just think everyone has to remember that it's not just the interest, it is also the principal. The markets have to keep working."


Comments: You can certainly feel the ever-important tone on these issues change for the better. And the equity markets picked up on that during Thursday trading which saw the Dow showing its best one-day gains in over a year and a half. But Sen. Reid and his Democrats are insisting the government be reopened before signing off on any short-term debt limit hike. Meanwhile, the White House is looking at sinking polls for Republicans and Sen. Ted Cruze (R-Texas). It is unclear whether or not the plunging approval ratings for Republicans will impact 2014 elections. If so, the GOP could become an entrenched minority party like the 1970s and 1980s.


 

NOTE: This column is copyrighted material, therefore reproduction or retransmission is prohibited under U.S. copyright laws.


 


 

 

 

 

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