House Republican leaders are presenting their members with a proposal to raise the debt limit for six weeks without policy conditions, said a congressional aide familiar with the details. The move would lessen the risk of a U.S. default one week from a lapse in borrowing authority.
The proposal wouldn’t end the partial government shutdown as Republicans try to shift the debate back to spending issues, said the aide, who asked for anonymity to discuss strategy. The plan’s emergence marked the first sign that the two parties could resolve part of the fiscal impasse that has shuttered the government for 10 days.
Under the plan, the Treasury Department wouldn’t be able to use so-called extraordinary measures to further extend borrowing authority, creating a hard six-week limit, said two aides requesting anonymity to discuss the proposal.
A vote is possible tomorrow or Oct. 12, said Representative Vern Buchanan of Florida.
President Barack Obama said he would accept a short-term increase in the debt limit without policy conditions and that he would negotiate on broader fiscal and health-care policy after the debt limit is raised and the shutdown ends.
White House officials refused to say whether Obama would sign a stand-alone extension of the debt ceiling, without ruling it out.
Many Republicans want to tie the debt-limit increase to party priorities such as cuts in entitlement programs such as Social Security and Medicare. Yet to be determined is whether rank-and-file members will agree to the leadership’s proposal.
“The only way I could support that is if we have a deal framework -- a top-line number of cuts that include reforms to entitlements,” Representative John Fleming, a Louisiana Republican, said as he entered the meeting today. “Anything short of that I couldn’t support.”
Treasuries (USGG10YR) and the Standard & Poor’s 500 Index declined this month amid the standoff. If the U.S. fails to raise the debt limit by Oct. 17, the government will have $30 billion plus incoming revenue to pay its bills. It would start missing scheduled payments, including benefits, salaries and interest, between Oct. 22 and Oct. 31, according to the Congressional Budget Office.
U.S. Treasury Secretary Jacob J. Lew warned Congress today that “uncertainty” over the debt limit is starting to stress financial markets.
“Trying to time a debt-limit increase to the last minute could be very dangerous,” Lew told the Senate Finance Committee. “If Congress does not act and the U.S. suddenly cannot pay its bills, the repercussions would be serious.”
House Republican leaders and selected committee chairmen are set to meet at the White House at 4:35 p.m. today. Democrats will meet with Obama at 1:45 p.m. Senate Republicans will go to the White House at 11:15 a.m. tomorrow.
Obama and other Democrats have insisted that they won’t negotiate on policy conditions attached to the debt limit. By making that their hard-line position and warning of the consequences of default, they opened the door to a shorter-term debt-limit increase.
“We’re not going to vote against making sure that America pays its bills,” Representative Steny Hoyer of Maryland, the second-ranking Democrat in the House, said after leaving a meeting with Obama yesterday. “We think it ought to be longer-term.”
The S&P 500 Index rose 1.4 percent at 10:05 a.m. in New York on optimism among some traders that a deal is closer. Rates on Treasury bills due Oct. 17 dropped for the first time in six days, declining 15 basis points to 0.333 percent at 9:47 a.m. New York time, according to Bloomberg Bond Trader prices. The benchmark 10-year yield rose five basis points, or 0.05 percentage point, to 2.71 percent, the highest level since Sept. 23.
“I’m not going to answer every single hypothetical,” he said today at the Center for American Progress in Washington.
Meanwhile, Senate Democrats will press ahead with their preferred plan, which would push the next debt-limit fight into 2015 and include no policy conditions.
Senate Majority Leader Harry Reid is confident he can muster the needed 60 votes to advance the bill in an initial Oct. 12 test vote, said a Senate Democratic aide.
Reid must gain support from at least six Republicans. One way to do that would be to promise votes on Republican-backed amendments that Democrats could defeat, the aide said. A second vote with a 60-vote threshold would be required.
Republican leaders have been meeting with party members to talk about ideas. Representative Paul Ryan, a Wisconsin Republican and chairman of the House Budget Committee, advocates starting broader budget negotiations with Democrats.
The shutdown and debt-limit debate have hurt Republicans’ standing with voters, according to a Gallup poll released yesterday. It found that 28 percent of Americans view the party favorably, down 10 percentage points since September and at the lowest point since Gallup began asking the question in 1992.
Senate leaders would be open to a short-term increase in the debt ceiling, a Senate Democratic aide said yesterday. Democrats would insist that any subsequent debt-limit increases wouldn’t require agreement by the parties on long-term fiscal and health-care policy.
Representative Kevin Brady, a Texas Republican, said lawmakers may need more time to on the debt ceiling “to make sure we get it right.” Republicans, he told reporters yesterday, “are not for defaulting.”
Advancing a debt-limit bill without major policy conditions through the House could prove difficult and might require Boehner to seek Democratic votes. Republicans control a 232-200 majority in the House.
Democrats, who control 54 seats in the 100-member Senate, would need the support of at least six Republicans on procedural votes to pass their bill.
The bill from Reid would suspend the debt ceiling through Dec. 31, 2014. Because the Treasury Department can use what are called extraordinary measures to stave off default, another increase wouldn’t be needed until sometime in 2015. The previous debt-limit suspension expired on May 18 and the extraordinary measures are lasting five months.
Some Senate Republicans, including Susan Collins of Maine, Saxby Chambliss of Georgia, Lisa Murkowski of Alaska and Lamar Alexander of Tennessee, didn’t rule out backing the Democrats’ plan. They said they must first see details.
One Republican senator -- Mark Kirk of Illinois -- said he would support a “clean” debt-ceiling measure.
The government shutdown started Oct. 1 after Republicans insisted that further funding for many programs must be tied to a one-year delay in the mandate that individuals who lack health insurance purchase it.
Obama and Senate Democrats refused, and the resulting furloughs and agency shutdowns have slowed mortgage closings, small-business loans and nutrition assistance to poor mothers. Some programs, such as Social Security, continue uninterrupted.
The House has taken a series of bipartisan votes to fund narrow pieces of the government, including the Food and Drug Administration and military death benefits. The House is now scheduled to be in session on Saturday, Oct. 12.
Obama and Senate Democrats reject the piecemeal approach, saying Republicans shouldn’t pick and choose politically popular items.
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