President Barack Obama and House Republican leaders are discussing a potential agreement that would extend the nation’s borrowing authority even as the Senate’s top Democrat said he didn’t want a short-term plan.
Senate Majority Leader Harry Reid said he is open to hearing Republican proposals, though he doesn’t like the idea of extending U.S. borrowing authority to Nov. 22 from Oct. 17. Reid 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.
Staff members for Obama and House Speaker John Boehner worked into the night yesterday after Boehner proposed postponing the lapse in U.S. borrowing authority. That step back from the brink triggered the biggest rise in U.S. stocks in nine months.
The developments yesterday were the first sign that the president and congressional Republicans could resolve the fiscal impasse and remove the prospect of default as a partial halt in government operations moved into its 11th day.
Obama is hosting Senate Republicans at the White House starting at 11:15 a.m. today.
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.
Obama didn’t accept or reject House Republicans’ plan for a short-term increase in the debt limit during a 90-minute meeting with party leaders and committee chairmen.
“No specific determination was made,” the White House said in a statement. The two sides talked about “potential paths forward.”
Representative Eric Cantor of Virginia, the House majority leader, called yesterday’s meeting with Obama “constructive” and that, with talks continuing, “hopefully we will have a clearer way, path forward.”
Obama began the meeting by acknowledging that Republican leaders’ offer to extend the debt limit was a positive step while urging them to stop the shutdown, according to a Democratic official who asked not to be identified discussing the closed-door deliberations.
The Republican lawmakers responded by saying that they needed concessions, the official said. Obama said he would consider what they want so long as they weren’t making demands as a condition for a spending bill that would allow federal agencies to resume operations.
A spending resolution without making changes in government policy “will pass overwhelmingly,” Representative Peter King, a New York Republican, said on “Political Capital With Al Hunt,” airing this weekend on Bloomberg Television. Boehner “has the leverage he needs, and I think it’s going to come to the House floor, no matter what,” he said.
If Boehner doesn’t bring the legislation to the House floor, King said he would support a discharge petition to force a vote, a step he had previously resisted.
“If we have to do a discharge petition, ultimately, we will, but this is going to come,” King said.
The financial markets, which have weathered fiscal brinkmanship at least four times since Republicans gained the House majority in January 2011, so far have taken Washington’s dysfunction in stride. Treasury Secretary Jacob J. Lew warned in testimony to lawmakers yesterday that “uncertainty” over the debt limit is starting to stress financial markets.
The Standard & Poor’s 500 Index rose 0.2 percent at 10:05 a.m. in New York after the gauge yesterday rose the most since Jan. 2.
Rates on Treasury bills due Oct. 24 fell three basis points, or 0.03 percentage point, to 0.29 percent as of 10:46 a.m. New York time, according to Bloomberg Bond Trader prices. The benchmark 10-year Treasury yield fell three basis points to 2.65 percent.
Senator Ron Johnson, a Wisconsin Republican, said at a Bloomberg breakfast today that lawmakers were using the debt ceiling for leverage because “how else can you get those people -- the president, Democrats in the Senate and the House -- to come to the table and start working with you in good faith to solve a long-term problem?”
Yesterday’s meeting was “very positive” and “a lot of air was cleared,” one participant, Representative Howard “Buck” McKeon of California, chairman of the Armed Services Committee, said today on MSNBC. “We’re going to get this worked out.”
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.
House Minority Leader Nancy Pelosi of California said ending the extraordinary measures “isn’t very smart” because it would limit Treasury’s flexibility.
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 preferred 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.
Reid’s proposal would suspend the debt ceiling through Dec. 31, 2014. Because the Treasury Department can use 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.
Senate Republicans also are considering a plan, being developed by Susan Collins of Maine, that would pair provisions to raise the debt ceiling and end the shutdown with a repeal of a medical-device tax included in the 2010 heath care law.
Democrats, even those who support repealing the medical device tax, have been adamant that they will refuse to do so as part of an agreement to end the shutdown or raise the debt ceiling.
Democratic aides have said they are open to allowing Republicans to offer amendments to their debt proposal, particularly if that helps gain early support to advance the bill. Such amendments almost certainly would be rejected.
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.
The shutdown would pare 0.2 percentage point from U.S. economic growth if it lasts through this week and as much as 0.5 point if it continues another two weeks, according to the median estimate in a Bloomberg survey of economists.
Republicans are debating what policy conditions they will insist upon. House Republicans are backing away from demanding major changes to the 2010 health-care law, the Patient Protection and Affordable Care Act.
The government shutdown started Oct. 1 after Republicans insisted that further funding for many programs be tied to a one-year delay in the health-insurance mandate.