Boehner Plan on Debt Limit Stalls Amid Shutdown Standoff

House Speaker John Boehner’s plan to avert a shutdown by shifting to a debt-ceiling fight ran into opposition from some Republicans in another setback for efforts to keep the U.S. government operating after Sept. 30.

As the Senate is set to vote today on a stopgap spending bill and send it back to the House, it’s uncertain if both chambers can strike a deal before funding authority expires.

The options are complicated after the Senate strips out the House’s plan to defund Obamacare. Boehner and House Republicans say they will offer other proposals before sending the measure back to the Senate, which could require another series of votes -- as time runs out before an Oct. 1 shutdown.

Boehner said yesterday the House wouldn’t pass a “clean” spending bill after the Senate acts and then said he has “no interest in seeing a government shutdown.”

“There will be options available to us, there’s not going to be any speculation about what we’re going to do or not do, until the Senate passes their bill,” he said.

U.S. stock-index futures fell, indicating the Standard & Poor’s 500 Index will extend its first weekly decline since August amid concern the impasse will hurt economic growth. The S&P 500 index is down 0.7 percent this week through yesterday.

Borrowing Authority

Boehner yesterday outlined for members a plan that would pair spending cuts, looser regulations and a delay in the 2010 health-care law with an increase in U.S. borrowing authority. Republican Representatives Paul Broun of Georgia, Louie Gohmert of Texas, Tim Huelskamp of Kansas and Mo Brooks of Alabama said they were opposed.

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

At this point, Huelskamp said “at least 18” members would oppose the plan. Starting today, Republicans will hold a 232-200 House majority, and can lose only 15 members on a party-line vote.

In 2011, Boehner had supported a dollar-for-dollar match between spending cuts and a 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.

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

Senate Vote

In the Senate, Majority Leader Harry Reid’s effort yesterday to move up a vote on the spending bill was thwarted by the objection of Republican Mike Lee of Utah. Instead, the Senate will hold several votes today on the stopgap bill, which Reid said will exclude Republican language denying funds for President Barack Obama’s signature health-care law.

After Lee and Ted Cruz, the Texas Republican who opposed Obamacare in a 21-hour Senate floor speech this week, voiced their objections, Senator Bob Corker said he was confused that both men wanted to delay the vote.

“It’s not the Republican side that’s asking to stall,” said Corker, a Tennessee Republican. “We only have two Republican senators who are asking to put this off” and most party members “would actually like to give the House time to respond in an adequate way.”

Nov. 15

Reid has said the Senate will remove the defunding language before sending the spending measure back to the House. The Senate also will shorten by a month to Nov. 15 the period for the stopgap funding under the measure, which continues current spending levels at a $986.3 billion annualized rate.

Republicans said they think they can force Obama to accept concessions in a debt-limit fight, although he has said repeatedly that he won’t negotiate. According to a Bloomberg National Poll conducted Sept. 20-23, 61 percent of respondents 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.

The Republican debt-limit bill would 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.

No Negotiations

Obama continued yesterday to say he won’t bargain on a debt-ceiling increase.

“I will not negotiate on anything when it comes to the full faith and credit of the United States,” Obama said in a speech 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.”

Without congressional action on the debt limit, the government will run out of borrowing authority on Oct. 17, Treasury Secretary Jacob J. Lew told lawmakers on Sept. 25.

After that, the government would have to 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.

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.

‘Can’t Control’

“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.

Senator Richard Durbin of Illinois, the chamber’s second-ranking Democrat, said it’s irresponsible to seek concessions on the spending bill.

Political bargaining on the stopgap measure or the debt limit increase means that “we’re finished,” Durbin said on Bloomberg Television’s “Capitol Gains” airing this weekend. “We’ll do this every time, maybe five or six times a year. What’s that going to do to us as a nation, to our government, to our reputation or to our economy?”

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.

Few Options

The calendar gives lawmakers few options, particularly in the Senate, where a single member can force as many as four days of debate on a bill. One option for Senate Democrats would be to leave Washington once they pass their version of the bill and insist they won’t accept any changes.

Such a move would put pressure on the House to accept the Senate’s version or risk a shutdown. If the House’s next volley used a new bill, that would signal the chamber’s leaders were reserving the option of passing the Senate’s bill unchanged.

With a few exceptions, Democrats are steadfast as they fend off major changes to 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 yesterday. “The next step is to threaten the debt ceiling. The victims will include not just federal employees but employees all across America.”

Senator Joe Manchin, a West Virginia Democrat, said yesterday 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.”

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

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

Before it's here, it's on the Bloomberg Terminal.