House GOP disarray surfaces over possible shutdown plan
WASHINGTON (CNN) — House Republicans have dropped two demands related to Obamacare from their proposal to end the fiscal stalemate in Washington, sources told CNN. These include a proposal to delay the medical device tax and another to tighten income verification of those seeking subsidies to purchase health insurance under the Affordable Care Act. Separately, Republican Rep. Devin Nunes of California told CNN’s Dana Bash that he expects the House to vote on Tuesday night on its plan to reopen the government and avoid a possible U.S. default.
Disarray among House Republicans surfaced Tuesday as the Senate closed in on an agreement to reopen the government and avoid a possible U.S. default as soon as this week.
House Speaker John Boehner was “struggling” to come up with enough votes to pass a GOP counter-proposal to the Senate plan, a House Republican leadership aide and other sources told CNN’s Dana Bash and Deirdre Walsh.
After a two-hour meeting with his caucus that lasted twice as long as scheduled, Boehner told reporters there was no final decision on what the GOP-led House would do.
“There are a lot of opinions about what direction to go. There have been no decisions about what exactly we will do,” he said.
In a possible signal that he would proceed on a plan opposed by the GOP tea party conservative wing, Boehner declared that “the idea of default is wrong and we shouldn’t get anywhere close to it.”
Senate leaders from both parties say a deal is near to temporarily fund the government to end a partial shutdown now in its 15th day and raise the federal borrowing limit to ensure that all bills can be paid.
The deadline for increasing the debt ceiling is Thursday, according to the Treasury, and economists warn that failure to act in time would spike interest rates with possible catastrophic impact at home and abroad.
However, House Republicans were considering their own proposal that would tack on provisions changing President Barack Obama’s signature health care reforms in what appeared to be a last-gasp effort to influence the proposed Senate agreement.
According to GOP sources and confirmed by Republican Rep. Darrell Issa of California, the House plan under consideration would include most of what is in the Senate proposal while adding a provision to suspend an Obamacare tax on medical devices for two years and remove federal health care subsidies for Obama and legislators when they obtain health coverage under the reforms.
In addition, the House proposal would forbid the Treasury from taking what it calls extraordinary measures to prevent the government from defaulting as cash runs low, in effect requiring hard deadlines to extend the federal debt ceiling.
Senate Majority Leader Harry Reid and other Democrats immediately slammed the House GOP leadership for what they called a reckless brinksmanship maneuver.
“Extremist Republicans in the House of Representatives are attempting to torpedo the Senate’s bipartisan progress with a bill that can’t pass the Senate,” Reid said on the Senate floor.
He earlier said he was “confident we will be able to reach a comprehensive agreement this week,” reiterating the optimism he expressed Monday night that raised hopes among investors, world leaders and regular Americans that the shutdown stalemate was nearing an end.
The White House also rejected the House proposal and signaled support for efforts to reach a compromise in the Senate.
Obama “is pleased with the progress we’ve seen in the Senate,” White House spokesman Jay Carney said.
“We hope Congress will act quickly to resolve these issues,” Carney added, while still cautioning that “we are from a deal at this point.”
Wall Street did not take the fresh tumult in Washington in stride with stocks down in afternoon trading.
Obama spoke Monday with McConnell, according to a GOP Senate aide, but the White House canceled a planned meeting with congressional leaders in what was perceived as a move to give Reid and McConnell room to negotiate.
Sen. Bob Corker, R-Tennessee, said it was time to get a deal done after lengthy delays he blamed on the unrealistic goal of gutting Obama’s signature health care reform law.
“The fact is we’ve got to figure out a way to move ahead,” he told CNN’s “New Day” on Tuesday. “In fairness, on our side of the aisle, we’ve wasted two months, focused on something that was never going to happen.”
However, the House GOP decision to offer a counter-proposal promised further delay toward final congressional action on an agreement.
House Democrats immediately criticized the GOP plan, with Rep. Xavier Becerra of California calling it a “reckless attempt to try to circumvent what the Senate is doing” so close to the deadline for a possible U.S. default.
“That to me seems very irresponsible, and it certainly falls far short of being common sense,” he said.
Two senior House GOP sources told CNN’s Walsh that the counter-proposal would pass in a way that allows the Democratic-led Senate to strip provisions with a simple majority.
Walsh and CNN Chief Congressional Correspondent Dana Bash explained that would make it harder for tea party conservatives such as GOP Sen. Ted Cruz of Texas to delay or derail the agreement.
The significance of having the House go first became clear later Tuesday when sources in both parties told CNN that senators working on the agreement put their work on hold temporarily as Reid and McConnell waited to see how the House proceeds.
Meanwhile, Cruz had a dinner meeting on Monday night with House conservatives to discuss the the emerging Senate deal and how to react, according to a source familiar with the gathering a Capitol Hill restaurant.
The congressional negotiations are being closely watched by other nations, which would also feel the impact should the United States run out of money to pay some of its bills.
Jon Cunliffe, who will become the deputy governor of the Bank of England, told British lawmakers over the weekend that banks should begin planning for contingencies.
The partial shutdown has proved costly. Hundreds of thousands of federal employees are either idle at home or not being paid while working.
And officials warn that tough choices are ahead about which bills to pay and which to let slide, should the shutdown and debt ceiling debate drag on.
So far, the standoff has cost the economy about $20 billion in gross domestic product, CNN’s Christine Romans reported Tuesday on “New Day,” citing Mark Zandi of Moody’s Analytics. GDP is a measure of the goods and services produced by an economy.
At a visit Monday to a local food pantry, Obama warned of what he called continued partisan brinkmanship by House Republicans who “continue to think that somehow they can extract concessions by keeping the government shut down or by threatening default.”
The finer points
Reid and McConnell have to reach a resolution on two critical issues: ending the shutdown that began on October 1 and raising the debt ceiling so the U.S. can borrow more money to pay all the government’s bills.
Democrats want an increase in the debt ceiling to last for several months, to avoid similar showdowns in coming months.
At the same time, they want a spending plan to reopen the government, but one that will be temporary. This will allow them to work toward a longer-term agreement that can negate the effects of the forced sequestration cuts.
Republicans want the opposite.
They want a longer spending proposal that would lock in the planned sequestration cuts in coming months. And they want a shorter debt ceiling extension in order to negotiate further deficit reduction measures.
At his visit to the Martha’s Table food pantry in Washington, Obama warned that a default — in which the government would lack enough cash on hand to pay down its debt obligations, as well as other daily bills such as Social Security checks — “could have a potentially devastating effect on our economy.”
Democratic sources told CNN that the proposal under consideration by Reid and McConnell would fund the government through January 15, allowing it to reopen for at least three months or so.
At the same time, negotiations on a budget for the full fiscal year would have a deadline of sometime in December, the sources said.
Meanwhile, the debt ceiling would be increased through February 7 to put off the threat of default for almost four months, according to sources in both parties.
The budget negotiations were expected to address deficit reduction measures and therefore could affect when the debt limit would need to be increased again.
In addition, provisions involving the 2010 Affordable Care Act known as Obamacare could be included, such as strengthening verification measures for people seeking federal subsidies to help them purchase health insurance required by the law, the sources said.
Another possible change to the health care reforms would delay a fee on employers, unions and other plan sponsors that raise money to compensate insurance companies for taking on high-risk customers in the early years of Obamacare.
CNN political analyst John Avlon said Monday that Democrats wanted to press what they perceive as an advantage over Republicans on how the public regards the latest round of Washington budget and deficit brinkmanship.
“What’s behind it (are) poll numbers that saw Republicans getting their butt kicked because of this whole gamesmanship,” Avlon said.
By Tom Cohen
CNN’s Dana Bash, Jason Hanna, Dana Ford, Greg Clary, Deirdre Walsh, Mark Preston, Chelsea J. Carter, Dan Merica, Brianna Keilar and Janet DiGiacomo contributed to this report.