President Barack Obama didn’t accept or reject House Republicans’ plan to increase the debt limit as the two sides pledged to keep talking tonight about avoiding default and ending the partial government shutdown.
Both sides described the talks -- continuing tonight between staff members -- as constructive with a week remaining until U.S. borrowing authority lapses.
Obama told Republicans during a White House meeting that he wants to raise the debt limit and end the shutdown, now in its 10th day, said Representative Hal Rogers of Kentucky. The Republican proposal released earlier today included only a short-term increase in the debt limit.
“He would like the shutdown stopped,” Rogers said. “We are trying to find out what it is he would insist upon” in a spending bill and “what we would insist upon.”
Republican House Speaker John Boehner’s plan and Obama’s willingness to continue talking marked the first serious negotiations between the parties to resolve the impasse without the catastrophic economic consequences that the Treasury Department said would stem from a default.
The White House released a statement saying that “no specific determination was made” and that the two sides talked about “potential paths forward” during the 90-minute meeting. Obama has insisted on raising the debt ceiling and ending the government shutdown before starting broader fiscal talks.
“House Republicans remain committed to good faith negotiations with the president, and we are pleased there was an opportunity to sit down and begin a constructive dialogue tonight,” party leaders said in a statement.
A vote on the debt-limit bill could occur as soon as tomorrow. The proposal from Boehner wouldn’t end the partial shutdown, though Representative Tom Cole of Oklahoma said a bill to end it would be considered soon. He wouldn’t say whether Republicans would insist on changes to Obama’s health law, the Patient Protection and Affordable Care Act.
“I hope the Republicans decide what they want and we’ll be happy to work with them in any way,” Senate Majority Leader Harry Reid of Nevada said at the White House after he and other Senate Democrats met with Obama for almost two hours earlier today. “We’ll just wait and see because they cannot decide what they want.”
The Debt Ceiling
Jay Carney, the White House press secretary, said today that Obama would support a short increase in the U.S. debt limit with no “partisan strings attached,” though he prefers a longer extension. Carney said the White House would need to see a bill before accepting it.
Boehner and Republican leaders say they want to engage Obama in talks about the budget. Those conversations would start under an unwritten agreement that wouldn’t be part of the debt-limit measure, said Representative Dave Camp, a Michigan Republican and chairman of the House Ways and Means Committee.
Asian stock indexes from Japan to Australia rallied more than 1 percent, fueling a 1 percent jump in the MSCI Asia Pacific Index of regional equities. Futures on the Standard & Poor’s 500 Index pared declines of as much as 0.7 percent to trade little changed by 10:38 a.m. in Tokyo. The benchmark U.S. gauge surged 2.2 percent today, the most since Jan. 2.
While the dollar extended gains against the yen, the U.S. currency lost 0.3 percent against the Malaysian ringgit and South Korean won. Crude oil retreated 0.3 percent to $102.71 a barrel. Industrial metals climbed, with copper, nickel and zinc rising at least 0.3 percent.
The benchmark 10-year Treasury yield earlier rose two basis points, or 0.02 percentage point, to 2.68 percent, after touching 2.72 percent, the highest level since Sept. 23. The rates for all Treasury bills maturing through Nov. 14 fell.
Cole, a Boehner ally, said the shutdown could be “settled pretty quickly” after the debt-limit bill passes.
“This is like the witching hour,” he told reporters. “Everything has come to pass right here: obviously the debate over Obamacare, the sequester, the end of the fiscal year, the debt ceiling have all basically converged into a single opportunity for either disaster or negotiated success.”
Republicans are debating what policy conditions they would want to attach to a bill that would end the shutdown, said a Republican aide who requested anonymity to discuss strategy.
House Republicans are backing away from demanding major changes to the 2010 health-care law, the aide said.
A Wall Street Journal/NBC News poll released today 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.
Pushing back the debt-ceiling deadline will allow the debate to refocus on delaying the mandate for individuals who lack health insurance to purchase it, said Representative Raul Labrador, an Idaho Republican.
Under the House 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. A vote is possible tomorrow or Oct. 12, said Representative Vern Buchanan of Florida.
House Minority Leader Nancy Pelosi of California said ending the extraordinary measures “isn’t very smart” because it would limit Treasury’s flexibility.
Many Republicans want to tie the debt-limit increase to party priorities such as cuts in entitlement programs such as Social Security and Medicare. Still to be determined is whether rank-and-file members will agree to the leadership’s proposal.
Republicans have a 232-200 majority and can lose votes from only 15 members before they need to rely on Democrats.
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.
Senate Republicans will go to the White House at 11:15 a.m. tomorrow.
Meanwhile, Senate Democrats will press 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 Oct. 12.
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.
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.
Obama and Senate Democrats refused, and the resulting furloughs and agency shutdowns have slowed mortgage closings, small-business loans and nutrition assistance to poor mothers. Some programs, such as Social Security, continue uninterrupted.
The House has taken a series of bipartisan votes to fund narrow pieces of the government, including the Food and Drug Administration and the Federal Emergency Management Agency.
Obama and Senate Democrats reject that piecemeal approach, saying Republicans shouldn’t pick and choose politically popular items.
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