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House Debt-Cap Conditions Hit Resistance in Budget Fight

Senator Harry Reid
Senator Harry Reid acted after the Senate yesterday unanimously voted to advance the stopgap spending bill, accelerating a showdown with House Republicans over the health law with a government shutdown just days away. Photographer: Andrew Harrer/Bloomberg

House Republican leaders offered a proposal today to increase the U.S. debt ceiling that drew protests from some members as the disputes over federal spending risk a government shutdown in four days.

The leaders are preparing for what House Speaker John Boehner last month called a “whale of a fight” on the debt limit. They’re banking on winning public support for pairing spending cuts, looser regulations and an Obamacare delay with the increase in the debt cap rather than leading to a government shutdown over the budget on Oct. 1.

At least four Republicans -- Paul Broun of Georgia, Louie Gohmert of Texas, Tim Huelskamp of Kansas and Mo Brooks of Alabama -- said they would oppose the debt-limit measure. Others including Michele Bachmann of Minnesota and Tom Price of Georgia said they support it. Starting tomorrow, Republicans will hold a 232-200 House majority, and can lose only 15 members on a party-line vote such as this one.

In 2011, Boehner had supported a dollar-for-dollar match between spending cuts and the debt ceiling increase. Now, he’s pairing “reforms and cuts” with the debt-limit increase and counting the expected revenue that would stem from faster growth caused by lighter regulation.

Cut Spending

“This debt-ceiling package does not fix the underlying cause of the problem, which are the deficits,” Brooks told reporters at the Capitol today. “We need to significantly cut government spending.”

The Republican bill will seek to increase means-testing for Medicare, reduce the Medicaid provider tax, revise medical malpractice law and eliminate a public-health fund as part of the 2010 law. Republicans also want to eliminate a tax on medical devices and require a Social Security number in order to receive a child tax credit, according to the proposal.

Huelskamp, who opposed Boehner as House speaker, said he doesn’t support the leaders’ debt-limit bill. At this point, he said “at least 18” members would oppose the measure.

“It looks like a $1 trillion increase and it doesn’t meet the Boehner one-for-one rule,” he said in an interview. He said the bill also doesn’t balance the U.S. budget in 10 years.

U.S. stocks rose, ending the longest slump this year for the Standard & Poor’s 500 Index, after an unexpected drop in jobless claims overshadowed growing concern that a budget impasse could hurt the economic recovery.

Spending Concessions

Republicans said they think they can force President Barack Obama to accept concessions, although he has said repeatedly that he won’t negotiate on the debt limit. According to a Bloomberg National Poll conducted Sept. 20-23, 61 percent say that it’s “right to require spending cuts when the debt ceiling is raised even if it risks default,” because Congress lacks spending discipline.

Obama said Republicans are becoming increasingly “irresponsible” in their attempts to thwart the health-care law and are trying to “blackmail” him.

“I will not negotiate on anything when it comes to the full faith and credit of the United States,” Obama said in a speech today to promote his health-care law at Prince George’s Community College in Largo, Maryland, a suburb of Washington. “Congress needs to put an end to governing crisis-to-crisis.”

House leaders are laying out their plans for a debt-limit increase to rally members behind a list of party priorities while they wait for the Senate to complete action on stopgap spending legislation to keep the government operating when funding runs out Sept. 30.

Contingency Plans

Representative John Fleming, a Louisiana Republican, said House Republicans would “continue to fight” for limits on the health-care law in the spending bill. Fleming said leaders also discussed contingency plans for a shutdown.

“There is always a possibility, that is not the goal at all, we don’t want to shut down government but we can’t control what the Senate does,” Fleming said.

The Democratic-controlled Senate is poised to strip out Republican language that would choke off funds for the 2010 health-care law and vote sometime before Sept. 28 then will send the bill back to the House. The Senate proposal would fund the government through Nov. 15.

Senator Richard Durbin of Illinois, the chamber’s second ranking Democrat, said it wouldn’t be responsible for the Senate to take longer than necessary to return send the proposal back to the House.

‘Adult Approach’

“What we’re trying to do is a responsible, adult approach: Do it in a timely fashion so that agencies of government are not sweating bullets about Tuesday morning,” Durbin said. “We’re not playing games here and waiting until the last minute. We’re trying to get this done as quickly as we can.”

Boehner, an Ohio Republican, said today the House wouldn’t pass a “clean” spending bill after the Senate acts. House leaders have been mulling attaching a repeal of an excise tax on medical devices, limits on government health-care coverage for members of Congress and other items.

“We have no interest in seeing the government shut down,” Boehner said. “There will be options available to us, there aren’t going to be speculations about what we’re going to do or not do, until the Senate passes their bill.”

Speedy Action

Senate Majority Leader Harry Reid, a Nevada Democrat, urged his colleagues to speed up the process on the spending bill.

“We know what the end is like here -- that we can finish this some time Saturday -- but it would seem to me that we should do everything we can to get this back to the House as soon as possible,” Reid said today.

Reid said as of now Republicans “don’t know what they’re going to do.” He said House Republicans are in a “ditch,” adding that he hadn’t had “a single conversation” with Boehner in recent days.

“There’s no need for conversations.” he said. “We’ve spoken loudly and clearly and we have the support of the president of the United States and that’s pretty good.”

The divided Congress is still in the early stages of a dispute that will play out over the next few weeks as the U.S. nears the end of its fiscal 2013 spending authority and reaches the $16.7 trillion cap on borrowing.

Nov. 15

Today, the Senate is debating a proposal from Reid that would restore funding for the health law -- Obama’s signature legislative achievement -- and pay for government operations through Nov. 15, a month shorter than the funding expiration date in a measure passed by House last week.

Reid acted after the Senate yesterday unanimously voted to advance the stopgap spending bill, accelerating a showdown with House Republicans. He also moved last night to limit discussion on the measure, setting up a vote tomorrow to end debate and a final vote as late as the next day.

With a few exceptions, Democrats are steadfast as they fend off major policy changes in the health law, particularly if attached to what they see as a routine bill to keep the government running or legislation to prevent a first-ever U.S. default.

Republicans are “playing high-stakes poker with other people’s money,” Durbin said. “The next step is to threaten the debt ceiling. The victims will include not just federal employees but employees all across America.”

Manchin, Warren

Senator Joe Manchin, a West Virginia Democrat, said today at a Bloomberg Government breakfast that he would support a one-year delay in the individual mandate to buy health insurance, which begins in 2014, breaking with his party. He called a delay “very reasonable and sensible.”

Senator Elizabeth Warren, a Massachusetts Democrat, at a Financial Services Roundtable meeting, today urged executives of financial institutions to speak out against using an increase in the debt limit as a way to advance unrelated initiatives.

“Preventing an actual default -- a self-inflicted wound that would cause a spike in interest rates and freeze in our credit markets -- is clearly in your interests,” Warren said.

Senator Amy Klobuchar, a Minnesota Democrat and one of the leading Senate repeal advocates, said she didn’t support adding policy provisions to a short-term spending bill.

Republicans are considering a one-year delay in the implementation of the health law’s individual mandate and postponing the federal data hub connecting state health exchanges with agencies including the Internal Revenue Service.

A delay of the independent payment advisory board is also under consideration, they said. The board created under the law must recommend policies to Congress to help Medicare provide better care at lower costs, according to the White House.

Without congressional action, the government will run out of borrowing authority on Oct. 17, Treasury Secretary Jacob J. Lew told lawmakers yesterday.

After that, the government would be operate on a cash basis and would be unable to pay its bills sometime from Oct. 22 to Oct. 31, the Congressional Budget Office said.

The spending bill is H.J. Res 59. The device tax repeal is H.R. 523.

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