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Boehner Said Obama Rejected Fiscal Offer, Lawmaker Says

Photographer: Andrew Harrer/Bloomberg

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Photographer: Andrew Harrer/Bloomberg

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House Speaker John Boehner told fellow Republicans today that President Barack Obama rejected his latest fiscal offer, said Representative Raul Labrador, an Idaho Republican.

The speaker also told members that talks are continuing with the White House, according to another person in the room who sought anonymity to discuss the private meeting.

“The president rejected our deal,” Labrador told reporters after leaving Republicans’ closed-door meeting in Washington.

House Republican leaders’ plan would extend U.S. borrowing authority to Nov. 22 from Oct. 17 and would make some changes to Obama’s health-care law, structured in a way that could meet the political needs of each side to claim success.

“The president has a number of concerns” about Boehner’s proposal, White House press secretary Jay Carney told reporters yesterday after Boehner and Obama spoke by telephone about the speaker’s offer. The president 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, Carney said.

White House officials opened the door to talks on ending the government shutdown, even as they held firm on raising the debt ceiling without conditions. When asked whether the White House was shifting its position, Carney hedged, saying the administration was “encouraged” by “constructive signs coming from the Republicans.”

Senate Democrats

On the other side of the Capitol, Senate Democrats may hold a test vote today on their plan, which would push the next debt-limit fight into 2015 and includes no policy conditions. A vote that draws support from some Senate Republicans, who have said they are dissatisfied with the brinkmanship of House Republicans, may increase pressure on Boehner.

House Democrats said today they will try to use a procedural move known as a discharge petition to force a vote on a bill to end the shutdown without policy conditions. The move is a long shot; it would require Republicans who support it to break with Boehner in ways they haven’t on other procedural matters.

“We know the votes are there,” Maryland Representative Chris Van Hollen, the top Democrat on the Budget Committee, told reporters today. “Let’s vote to open the government now.”

Financial Markets

The indications of progress bolstered financial markets yesterday. U.S. shares rallied for a second day following the biggest jump since January and gold plunged to a three-month low while the yen weakened and oil slid. The Standard & Poor’s 500 Index (SPX) rose 0.6 percent to 1,703.20 yesterday in New York after jumping 2.2 percent the previous day.

The rate on $93 billion in Treasury bills due Oct. 24 was at 0.26 percent, according to Bloomberg Bond Trader data, after climbing as high as 0.50 percent on Oct. 10. It was zero as recently as Sept. 19. The rate on bills due Nov. 29 was at 0.16 percent, the highest since the security was issued.

House and Senate Republicans are starting to narrow their demands for health-care law changes, as polls show Americans are largely blaming them for the political impasse that has led to worker furloughs and agency shutdowns. A Wall Street Journal/NBC News poll released Oct. 10 found that 53 percent of those surveyed blamed Republicans for the fiscal impasse, compared with 31 percent who blame Obama.

Medical Devices

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.

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 2010 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 the Patient Protection and Affordable Care Act.

Obama has insisted that he won’t negotiate conditions to ending the 12-day-old shutdown or extending U.S. borrowing authority past Oct. 17, saying that Republicans are trying to extract a ransom for doing their job.

Reduced Demands

Republicans, who have called for defunding or delaying Obamacare, have reduced their demands over the past few weeks. The House “has demonstrated an incredible amount of flexibility,” Representative Peter Roskam of Illinois said on Bloomberg Television’s “Capitol Gains” airing this weekend. He is the House Republicans’ chief deputy whip.

Boehner may encounter opposition to his plan in today’s meeting. 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.”

In a meeting yesterday at the White House with Senate Republicans, Obama didn’t rule out repealing the medical-device tax, 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.

Senator Collins

Senate Republicans are focusing on a plan from Senator Susan Collins of Maine that would delay the medical-device tax for two years -- making up lost revenue through pension-rule changes -- and extend government funding for six months. 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 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.

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

‘Any Improvements’

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.

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

“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.

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 Democrats’ plan and that Reid should call off the vote.

Facing Questions

Any prospective deal faces questions, including whether Boehner can come to an agreement with Obama and not lose the support of his hardline members. They’ve sought to use the debt ceiling and government shutdown to force curbs on Obamacare and federal spending.

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.

Republicans should just concede and allow a vote to end the shutdown without conditions, Representative Peter King, a New York Republican, said in an interview yesterday.

“We should cut our losses and get it over with,” he said. “It’s madness to keep the government closed any longer.”

To contact the reporters on this story: Roxana Tiron in Washington at rtiron@bloomberg.net; Kathleen Hunter in Washington at khunter9@bloomberg.net; Terry Atlas in Washington at tatlas@bloomberg.net

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

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