Some Tea Party-Backed Lawmakers Yield in Obamacare Fight

The first cracks are appearing in the Tea Party’s push to dismantle the nation’s health law as three House lawmakers with ties to the movement said they’d back a U.S. spending bill that doesn’t center on Obamacare.

Republican Representatives Blake Farenthold of Texas, Doug Lamborn of Colorado and Dennis Ross of Florida, all of whom identify with the Tea Party, said they’d back an agreement to end the government shutdown and lift the debt ceiling if it included major revisions to U.S. tax law, significant changes to Medicare and Social Security and other policy shifts.

Meanwhile, House Speaker John Boehner said he doesn’t have the votes to pass an increase to the debt ceiling without packaging it with other provisions. There isn’t enough support to pass a “clean debt limit” provision, Boehner said in an interview on ABC’s “This Week” program today.

The government remains shut down for the sixth day and just 11 days from when Treasury Secretary Jacob J. Lew told lawmakers the U.S. will exhaust measures to avoid breaching the debt limit. The budget standoff started when Republicans insisted on choking off funding for President Barack Obama’s Affordable Care Act, known as Obamacare. The president has refused to negotiate.

“The president seems unwilling to give an inch on Obamacare, so, alright, where can we find other reforms?” Farenthold said in an interview at the Capitol yesterday, just after a vote on giving furloughed workers retroactive pay. “If we can make the same or bigger difference doing something other than Obamacare, I don’t see why we wouldn’t do it.”

Market Reaction

So far, the financial-market response to the political gridlock has been muted. The Standard & Poor’s 500 Index climbed 0.7 percent in New York Oct 4. The yield on the benchmark 10-year Treasury increased two basis points last week, trading between 2.66 percent and 2.58 percent.

While the yield is up from the record low of 1.38 percent in July 2012, it’s below the average of about 6.7 percent since the early 1980s, the start of the three-decade long bull market in bonds.

Other lawmakers backed by the Tea Party movement, including Republican Representative Jim Jordan of Ohio, are refusing to budge on their Obamacare stance. House Majority Leader Eric Cantor said yesterday that Republicans want “fairness” under the health-care law.

“The administration continues to give special treatment to big business and to special interests and have left the working-class Americans out,” Cantor told reporters. “Just give them the same treatment.”

Not Budging

Representative Raul Labrador, an Idaho Republican and leading voice in the fight against Obamacare, said a change to the law “has to be on the table.”

“A one-year delay is still reasonable to ask for,” Labrador said in an interview.

Lawmakers tied to the Tea Party pushed Boehner last month to fight for major changes to Obamacare as part of the budget debate. That stalemate led to the first government shutdown since 1996 and is now bleeding into a debate over the nation’s $16.7 trillion debt limit, which must be raised before Oct. 17 to avoid a U.S. default.

“We’ve tried a lot of things and used just about every arrow in our quiver against Obamacare,” Lamborn, 59, said yesterday. “It has not been successful, so I think we do have to move on to the larger issues of the debt ceiling and the overall budget.”

Debt Ceiling

Lamborn said he would back a debt-limit increase if the agreement included an equal amount of spending cuts. He said he’s also seeking a deal that includes instructions for major tax-code revisions.

“I recognize the writing on the wall,” he said.

Farenthold, 51, was a conservative radio talk-show host when he won election in 2010, defeating 28-year incumbent Democrat Solomon Ortiz.

The Obamacare battle, he said, was for “another day.”

“It will collapse under its own weight, especially when the young people -- who are going to be under the individual mandate -- start screaming at what they’re having to pay for,” he said.

Farenthold said he’d back a spending deal with tax code changes and entitlement reforms aimed at “getting people who are able to work, back to work.”

Position Shift

Ross, ranked among the House’s most conservative members by both the Club for Growth and the American Conservative Union, said he shifted his position because the shutdown hasn’t resulted in changes to the Affordable Care Act. The shutdown also could hurt the party, he said.

“We’ve lost the CR battle,” Ross, referring to the continuing resolution to authorize government spending, said in an interview. “We need to move on and take whatever we can find in the debt limit.”

Ross, 53, is pushing for other changes, such as basing Medicare premiums on income and switching to a formula that may make Social Security beneficiaries’ cost-of-living increases rise more slowly. Those would be “major reforms” that should win Republican votes.

“I’m not questioning my leadership,” Ross said. “I’m just suggesting that we need to take stock of where we’ve come and realize what it’s going to take for where we want to go,” he said, adding that he still favors changing the health-care law.

Ross said Republicans can claim victory for recent spending cuts, which he said are the first consecutive-year reductions in more than 50 years.

‘Be Realistic’

“We’ve got to be realistic about that and not go so far as that we do things that shut down the government to a great degree or default on our debt,” Ross said. “There’s room to make sure we continue on our course and not have catastrophic events.”

A spending deal would clear the way for compromises on other issues, such as immigration policy and revising the U.S. tax code, he said.

“There are a whole lot of other issues that haunted us at the election other than Obamacare,” Ross said. “I would hope there’s at least enough of us to constitute a majority of reasonable people that realize we need to give and take.”

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