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Republicans Narrow Demands for Increasing U.S. Debt Limit

House and Senate Republicans are starting to narrow their demands for health-care law changes in the U.S. fiscal impasse as they prod President Barack Obama to attach such revisions to a bill to end the government shutdown.

Obama and House Speaker John Boehner spoke today by telephone about Boehner’s offer, which would extend U.S. borrowing authority to Nov. 22 from Oct. 17. Language to curb the Patient Protection and Affordable Care Act would be attached to a stopgap spending bill.

“The president has a number of concerns with the proposal,” Jay Carney, the White House press secretary, told reporters today after Obama and Boehner talked. Carney said Obama is concerned that extending the debt ceiling for a short period while budget talks occur would lead to a replay of the same brinkmanship the U.S. is experiencing now.

“They agreed that we should all keep talking,” said Michael Steel, a spokesman for Boehner.

Obama has insisted that he won’t negotiate conditions for ending the 11-day-old shutdown or extending U.S. borrowing authority past Oct. 17. He has said that Republicans are trying to extract a ransom for doing their job. Republicans, who initially wanted to defund the health-care law, have reduced their demands since the shutdown began Oct. 1.

Conference Calls

The president spoke on two conference calls with almost 150 business executives and 25 governors to brief them on the status of talks to avoid breaching the debt limit, according to a White House statement. Obama also met with nine owners of small businesses at the White House.

Treasury Secretary Jacob Lew took part in the call with executives as the administration pressed its side of the argument.

House Republicans want to repeal a tax on medical devices for two years and are considering a change in how full-time workers are defined in the health law’s employer mandate, said a Republican lawmaker who spoke on condition of anonymity to discuss the party’s offer.

Senate Republicans are focusing on a plan from Senator Susan Collins that would delay the medical-device tax for two years and extend government funding for six months. Representative Hal Rogers, chairman of the House Appropriations Committee, rejected a six-month spending bill.

Collins Proposal

The Collins proposal would raise the debt ceiling through the end of January and give agencies more flexibility to allocate funds, said two Senate aides with knowledge of the proposal who sought anonymity because the talks are fluid. The plan also would require the Obama administration to verify income levels for enrollment in health-care benefits, and set a mid-January deadline for longer-term budget talks, they said.

The Standard & Poor’s 500 Index increased 0.6 percent to 1,703.19 at 4 p.m. in New York, erasing losses since the start of the government’s partial shutdown that began Oct. 1.

Rates on Treasury bills maturing in November and December jumped for a second day amid discussion of the Nov. 22 debt-ceiling date, according to Bloomberg Bond Trader prices.

Rates on debt due on Nov. 29 rose five basis points, or 0.05 percentage point, to 0.17 percent as of 4:09 p.m. New York time, according to Bloomberg Bond Trader prices, after adding eight basis points yesterday. They were negative Sept. 30. The benchmark 10-year Treasury yields were little changed at 2.68 percent after falling as much as four basis points earlier.

Senator Hatch

In a meeting today at the White House with Senate Republicans, Obama didn’t rule out repealing the medical-device tax in the health-care law, said Senator Orrin Hatch of Utah, an advocate of the tax’s repeal.

“I came away with the feeling this is going to be a difficult experience,” said Hatch, the top Republican on the Senate Finance Committee.

House Republicans are scheduled to meet at 9 a.m. tomorrow to discuss their plans.

A deal built around repealing the medical-device tax would be a “hollow victory” and further divide Republicans, said Representative Tim Huelskamp of Kansas, one of the House Republicans still pushing to dismantle the health-care law.

“It would still fund 98 percent of Obamacare,” Huelskamp said of the latest Republican proposal. “That won’t be sufficient for conservatives and will be seen as capitulating to the left.”

Pension Rules

Collins’s plan would pair provisions to raise the debt ceiling and end the shutdown with a two-year delay in the medical-device tax. It would change pension rules to offset the lost revenue from the device tax. The delay being considered by the House would require a smaller offsetting revenue increase or spending cut.

“What he didn’t say was, ‘What a great idea, wish I had thought of that,’” Collins of Maine said after declining to provide more details on the president’s reaction because she didn’t know the ground rules of the meeting.

Changing the device tax, even in a later agreement, could provide a way for both sides to declare victory -- an essential component of the negotiations. The 2.3 percent excise tax is scheduled to raise about $30 billion over the next decade and has been criticized by Democrats from states with device manufacturers such as Massachusetts and Minnesota.

Republicans could say they made a change to Obamacare, because the medical-device tax was passed as part of the law. Obama can say he didn’t negotiate on the principles of the health-care law, because eliminating the tax wouldn’t end the individual mandate or other main components of Obamacare.

‘Legitimate Concern’

The president said the medical device tax “is a legitimate concern and one that we can talk about and admitted that it’s not part of the core program,” said Hatch, the top Republican on the Senate Finance Committee.

The president told lawmakers he “was open to any improvements” to the health care law, though “he’s not open to changing it much,” said Hatch, a critic of the law.

One change, he said, might be the definition of full-time employees who must be given coverage by employers. Republicans cite businesses that are cutting employees’ hours to below the 30 per week threshold.

House Republicans also want Obama to agree to a framework for future negotiations on long-term fiscal and health-care policy.

Senate Majority Leader Harry Reid said today he is open to hearing Republican proposals, though he doesn’t like the idea of extending U.S. borrowing authority only to Nov. 22. Reid said he would continue advocating a delay of the next debt-limit fight into 2015.

‘Bedlam’ Period

“Using their theory, we would have another one of these periods of bedlam here in Washington right before the most important purchasing season anytime during the year,” Reid said, referring to the holiday shopping season, without saying he would stop a short-term extension.

Any prospective deal faces questions, including whether Boehner can make a deal with Obama without losing the support of his hard-line members. They’ve sought to use the debt ceiling and government shutdown to force curbs on Obamacare and federal spending.

Under Boehner’s plan, the Treasury Department wouldn’t be able to use so-called extraordinary measures to further extend borrowing authority, creating a hard deadline, said Representative Tom Reed, a New York Republican.

$30 Billion

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.

Meanwhile, Senate Democrats are pressing ahead with their plan, which would push the next debt-limit fight into 2015 and include no policy conditions. A test vote could occur tomorrow.

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. Collins said she wouldn’t support the plan and that Reid should call off the vote.

A Wall Street Journal/NBC News poll released yesterday found that 53 percent of those surveyed blamed Republicans for the fiscal impasse, compared with 31 percent who blame Obama.

To contact the reporters on this story: James Rowley in Washington at jarowley@bloomberg.net; Roxana Tiron in Washington at rtiron@bloomberg.net; Kathleen Hunter in Washington at khunter9@bloomberg.net

To contact the editor responsible for this story: Jodi Schneider at jschneider50@bloomberg.net

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