PJ Media

House Compromise Effort Slips; Senate Rushes Toward Deal

WASHINGTON – Congress descended into a situation approaching chaos on Tuesday as House Republican leaders proved incapable of mustering the votes necessary to adopt a proposal to reopen the federal government and stave off default.

The focus now returns to the Senate, which was closing in on a bipartisan deal before Senate Republican Leader Mitch McConnell, of Kentucky, recessed high-level talks with Senate Democratic Leader Harry Reid, of Nevada, to provide the lower chamber with an opportunity to offer a solution.

That prospect crashed early Tuesday evening when House Speaker John Boehner (R-Ohio) was unable to attract enough GOP support to pass a plan that House Democratic Leader Nancy Pelosi, of California, characterized as “reckless.”

The reluctance of some Republican lawmakers to get behind a Boehner plan apparently stems from a threat issued by Heritage Action, a conservative organization tied to the Heritage Foundation think tank, which announced it would take a dim view of anyone who supported the measure.

All this, and more, occurred as the federal government approached an excruciating Oct. 17 deadline. The Treasury Department and the White House have made it clear that Washington is about to bump up against its $16.7 trillion debt ceiling, meaning the government will no longer be authorized to borrow the money necessary to pay its bills. Raising the debt ceiling requires congressional action, which has not occurred.

In addition, the federal government entered the third week of a partial shutdown on Tuesday, brought on because Congress has been unable to approve a temporary spending plan, known as a continuing resolution.

It appeared on Monday night that the Senate was rushing toward an agreement. Both Reid and McConnell expressed optimism that an accommodation could be reached that finally closed the ongoing crisis. The blueprint of the Senate deal funded the government to Jan. 15, authorized the federal government to borrow funds through Feb. 7 and laid the groundwork for negotiations over federal spending and taxation.

In addition, the proposal recommended a few minor changes to the Affordable Care Act, popularly known as Obamacare, the healthcare reform law that launched the ongoing imbroglio. A provision sought by Republicans would establish stronger regulations to assure that those seeking subsidies to buy health insurance, as required under the law, are qualified. In exchange, Democrats would get a delay until 2015 in assessing a tax on health insurance policies that is expected to add about $63 per individual to the cost beginning in January.

But on Tuesday morning Boehner announced that the House – which had failed in prior attempts to resolve the contretemps with the White House – was going to make yet another attempt to end the standoff. The framework for that Boehner proposal opened the federal government and raised the debt ceiling but changed the conditions under consideration by the Senate, adopting instead a two-year repeal of a medical device tax and a provision eliminating the employer healthcare contribution for members of Congress and White House officials.

It quickly became obvious Tuesday morning, however, that Boehner couldn’t attract enough votes to get the package through the lower chamber. Tea Party conservatives within the caucus maintained the effort didn’t wring sufficient concessions from the White House, particularly as they related to Obamacare.

At the outset of the debate a few weeks ago, House Republicans demanded that Obamacare be defunded in exchange for the party’s support for supporting a continuing resolution to keep the government open beyond the end of the federal fiscal year that ended on Oct. 1. The GOP soon backed off that demand, seeking instead a one-year postponement in the implementation of various Obamacare provisions and, when that likewise sank, it sought concessions in federal spending.

President Obama and Reid, meanwhile, refused to negotiate with the Republican-controlled House, maintaining it was holding the federal government hostage. The resulting stalemate continues.

Unable to convince the GOP caucus to go along with his initial proposal Tuesday, Boehner switched gears and offered yet another alternative by the afternoon, one that would reopen the government through Dec. 15, provide the Treasury with borrowing authority through Feb. 7 and eliminate the employer healthcare contribution for members of Congress and Capitol Hill workers. The plan also would have prohibited the Treasury from taking what are popularly referred to as “extraordinary measures” – basically juggling the government’s books — to extend its borrowing capabilities.

But that effort also drew a cold shoulder from conservatives. Complicating matters was the unexpected position taken by Heritage Action, which announced its opposition to the plan because it failed to defund Obamacare. The group said it would consider the vote on the Boehner proposal in its influential scorecard.

“Unfortunately, the proposed deal will do nothing to stop Obamacare’s massive new entitlements from taking root — radically changing the nature of American healthcare,” the organization said in a statement.

It was left to Rep. Greg Walden (R-Ore.), chairman of the National Republican Congressional Committee, to announce no vote would be held.

“We’re trying to find a way through it,” he said.

Should Reid and McConnell reach an accord, the Democratic leader likely will try to call the proposal up for consideration under unanimous consent. In that situation, any member of the Senate can object and delay consideration for at least one day – taking it to Thursday. Sen. Ted Cruz (R-Texas), who has led the fight against Obamacare and approving either the continuing resolution or the debt ceiling increase, has not indicated how he will react.

Repercussions from congressional inaction are beginning to be felt. The stock market dropped 133 points on Tuesday when prospects for a deal disappeared. And Fitch Ratings, a major credit rating agency, announced that it has placed the U.S. on a “negative ratings watch.”

In a statement, Fitch explained its actions, saying, “The U.S. authorities have not raised the federal debt ceiling in a timely manner before the Treasury exhausts extraordinary measures. The U.S. Treasury Secretary has said that extraordinary measures will be exhausted by Oct. 17, leaving cash reserves of just $30 billion. Although Fitch continues to believe that the debt ceiling will be raised soon, the political brinkmanship and reduced financing flexibility could increase the risk of a U.S. default.”

While the Treasury would still have limited capacity to make payments after Oct. 17, Fitch said, “the Treasury may be unable to prioritize debt service, and it is unclear whether it even has the legal authority to do so. The U.S. risks being forced to incur widespread delays of payments to suppliers and employees, as well as social security payments to citizens – all of which would damage the perception of U.S. sovereign creditworthiness and the economy.”