Bloomberg News

Shutdown Nears as Republicans Plot Next Salvo on Obamacare (1)

September 28, 2013

U.S. Capitol Building

A government shutdown could reduce fourth-quarter economic growth by as much as 1.4 percentage points, depending on its duration, according to economists. Photographer: Mark Wilson/Getty Images

The U.S. government edged closer to a partial shutdown in three days as House Republicans prepared to lob another anti-Obamacare volley at Senate Democrats who vow they won’t accept it.

House Republicans, divided over how far to take their fight against President Barack Obama’s 2010 health care law, will meet at noon to decide what conditions they want to attach to a short-term spending bill. They could vote as soon as today and may consider an extension of just a few days to buy time, said Representative Tom Cole of Oklahoma.

The main options include a one-year delay in provisions of the health law such as the mandate that individuals buy health insurance and several tax increases. Senate Democrats, who passed a measure yesterday to keep the government open through Nov. 15, said they won’t accept conditions and that the House’s refusal to adopt a no-strings-attached spending bill will force agencies to close.

“This is the only legislation that can avert a government shutdown,” said Senate Majority Leader Harry Reid, a Nevada Democrat, before the chamber adjourned for the weekend. “House Republicans should think long and hard about what’s at stake and who would be hurt by a government shutdown.”

Budget brinkmanship has become a routine in Washington, particularly since Republicans gained control of the House in the 2010 election. A last-minute deal before midnight Sept. 30 is still possible, even with both sides seemingly dug into opposing positions.

Republican Address

House Republican Conference Chair Cathy McMorris Rodgers said today in the party’s weekly address that any debt limit increase should be coupled with spending cuts that boost the economy such as approving the Keystone pipeline, overhauling “outdated” tax codes and delaying the health care law.

“The president is now demanding that we increase the debt limit without engaging in any kind of bipartisan discussions about addressing our spending problem,” McMorris Rodgers, who represents Washington State, said in a video posted on YouTube. “He wants to take the easy way out – exactly the kind of foolishness that got us here in the first place.”

Obama said today in his weekly address that he would not accept “an even longer list of demands” from Republicans seeking concessions on the health care law or other issues as part of a reaching a deal to raise the debt limit.

“I will not negotiate over Congress’ responsibility to pay the bills it has already racked up,” Obama said. “No one gets to threaten the full faith and credit of the United States of America just to extract ideological concessions.”

Stocks Decline

Concerns that the budget impasse will hurt economic growth helped push the Standard & Poor’s 500 Index to its first weekly decline since August. That index fell 0.4 percent to 1,691.75 yesterday, and dropped 1.1 percent for the week. The rate on 10-year Treasury notes fell three basis points to 2.62 percent yesterday.

A shutdown could reduce fourth-quarter economic growth by as much as 1.4 percentage points, depending on its duration, according to economists. The biggest effect would come from the output lost from furloughed workers.

At the White House, Obama accused House Republicans of “political grandstanding” that has hurt economic growth, and he urged Congress to work together to pass a spending plan and then adopt legislation to increase the nation’s borrowing authority.

“Do not shut down the government. Do not shut down the economy,” Obama said yesterday. “Pass a budget on time. Pay our bills on time. Refocus on the everyday concerns of the American people.”

Essential Operations

In a government shutdown, essential government operations and programs financed with permanent streams of money would continue, meaning that Social Security checks would be delivered and military personnel would still work. National parks, Internal Revenue Service call centers and passport offices are among the federal facilities that could close.

Obama spoke hours after the U.S. Senate voted 54-44 to finance the government through Nov. 15 after removing Republican language to choke off funding for the health law. The Senate’s move puts pressure on the House to avoid a federal shutdown set to start Oct. 1.

“The House will take action that reflects the fundamental fact that Americans don’t want a government shutdown and they don’t want the train wreck that is Obamacare,” said Brendan Buck, a spokesman for House Speaker John Boehner. “Grandstanding from the president, who refuses to even be a part of the process, won’t bring Congress any closer to a resolution.”

Internal Disputes

House Republican leaders haven’t identified their next move, and they’ve been stymied by internal disputes. The initial plan from Boehner and Majority Leader Eric Cantor would have let the Senate remove the Obamacare defunding language and send the spending bill to Obama.

Under pressure from Tea Party-backed members, the leaders relented and forced the Senate to send the bill back to them.

Then, Boehner of Ohio and Cantor of Virginia tried to get Republicans to shift their energy to the fight over raising the $16.7 trillion debt ceiling. They offered a proposal that would pair a debt-limit increase with a long list of Republican priorities on regulation, energy and entitlement spending.

The same group of Republicans, including Representatives Tom Graves of Georgia and Mark Meadows of North Carolina, pushed Boehner to wait and continue the spending-bill debate. Republicans have a 232-200 majority, meaning as few as 16 members can force the leadership to move their way by vowing to withhold their votes.

Cole, who is close to the speaker, said leaders will have a plan ready for rank-and-file members to present at today’s closed-door meeting.

‘Good Sense’

“They’ve got a pretty good sense of where the conference is,” he said in an interview.

At least 60 lawmakers support a proposal from Graves to attach a one-year delay in many health law provisions to the House’s next spending bill. They maintain that it’s akin to the delay the administration provided for the requirement that employers provide health insurance.

“The argument to me is so simple, so basic: Treat all of America, Mr. President, like you treat big business,” said Representative Jim Jordan, an Ohio Republican.

House Republicans will get little if any help from Democrats, said Representative Xavier Becerra of California, chairman of the Democratic caucus.

‘Clean Budget’

“We want a clean budget vote,” Becerra told reporters yesterday. “That’s all Democrats are saying.”

Democrats, including Senator Charles Schumer of New York, called on Boehner to show “courage” and pass a spending bill with Democratic votes.

“Just step up to the plate and do it,” Schumer said. “He’s not going to lose his speakership. He’s not going to lose his election. Please - enough already.”

Senate Democrats easily cleared a hurdle to cut off debate, which required the support of 60 senators. The chamber voted 79-19 yesterday to proceed to the measure. All 19 “no” votes were from Republicans, including Ted Cruz of Texas, Kentucky’s Rand Paul and Florida’s Marco Rubio, three potential 2016 presidential aspirants.

Most Senate Republicans, including Minority Leader Mitch McConnell of Kentucky, rejected calls from Cruz to oppose cutting off debate. Cruz, who staged an almost 22-hour speech this week to protest the health-care law, said halting debate would pave the way for Democrats to restore funding.

‘Voices Heard’

Cruz told reporters after the vote that he hoped his talk-a-thon “had a positive impact on framing the issue for the American people and mobilizing and energizing those who are hurting under Obamacare to speak out and have their voices heard in Washington.”

In a statement, he said he hoped Senate Republicans would “rise to the challenge” when the House sends back the bill.

Before the vote, McConnell said he would support a one-year delay of the law and called on Democratic senators to join with Republicans.

“Let’s work together to actually do it,” he said. “The American people want this law repealed. Republicans want this law repealed.”

In a letter to lawmakers yesterday, the U.S. Chamber of Commerce and other business groups urged Congress to keep the government open and raise the debt limit, and then “return to work on these other vital issues,” including entitlement spending.

Debt Limit

Following the short-term budget debate will be what Boehner said would be a “whale of a fight” over raising the debt limit. The government won’t be able to pay all its bills by the end of October without an increase, according to the Congressional Budget Office.

Obama reiterated his refusal to negotiate on the debt ceiling.

“It would have a profound destabilizing effect on the entire economy -- on the world economy, because America is the bedrock of world investment,” he said. “Voting for the Treasury to pay America’s bills is not a concession to me. That’s not doing me a favor. That’s simply carrying out the solemn responsibilities that come with holding office up there.”

The bill is H.J. Res. 59.

To contact the reporters on this story: Roxana Tiron in Washington at rtiron@bloomberg.net; Richard Rubin in Washington at rrubin12@bloomberg.net; Michael C. Bender in Washington at mbender10@bloomberg.net

To contact the editor responsible for this story: Jodi Schneider at jschneider50@bloomberg.net


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