Oct. 11 (Bloomberg) -- Senate Republicans said President Barack Obama is open to changing a tax on medical devices in the future as talks continue about ending a partial government shutdown and raising the debt limit before U.S. borrowing authority lapses Oct. 17.
In a meeting today at the White House, Obama didn’t rule out repealing the tax, which was included in the Patient Protection and Affordable Care Act, said Senator Orrin Hatch of Utah, an advocate of the tax’s repeal.
The president said he was encouraged by Senate Republicans’ efforts on a debt-limit plan, said Senator John McCain of Arizona. Obama has insisted that any health-law changes occur after the government shutdown ends and the debt limit is raised, senators said.
“I came away with the feeling this is going to be a difficult experience,” said Hatch, the top Republican on the Senate Finance Committee.
The meeting with Senate Republicans occurred as the White House weighs an offer from House Republicans. The House proposal for a debt-limit increase through Nov. 22 would require Obama to accept policy conditions attached to a separate spending measure, said two congressional aides.
House Republicans are scheduled to meet at 9 a.m. tomorrow to discuss their plans.
Their Senate counterparts 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 device-tax repeal. It would change pension rules to offset the lost revenue from the device tax and give federal agencies more flexibility to manage spending cuts known as sequestration.
“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.
The Standard & Poor’s 500 Index increased 0.5 percent to 1,700.57 at 1:58 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, 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 2:42 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.
“The U.S. needs to take urgent action to address short-term fiscal uncertainties,” the Group of 20’s central bankers and finance ministers said in a statement today.
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.
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 sent a list of policy options to the White House following a meeting yesterday, said the House aides, who spoke on condition of anonymity.
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.
“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 House Speaker John 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.
Republicans should just concede and allow a vote to end the shutdown without conditions, said Representative Peter King, a New York Republican.
“We should cut our losses and get it over with,” King said in an interview today. “It’s madness to keep the government closed any longer. It’s a governmental disaster, it’s a political disaster and it makes no sense.”
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.
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 government shutdown started Oct. 1 after Republicans insisted that further funding for many programs be tied to a one-year delay in the mandate that individuals lacking health insurance purchase it.
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