White House Meeting Delayed to Give Talks More Time to Progress
WASHINGTON—Top Senate leaders said they were within striking distance of an agreement Monday to reopen the federal government and defuse a looming debt crisis just days before the U.S. could run out of money to pay its bills.
Senate Majority Leader Harry Reid (D., Nev.) said on the Senate floor that the leaders had made "tremendous progress" toward a deal and that he was hopeful Tuesday would be a "bright day." The Senate's Republican leader, Mitch McConnell of Kentucky, seconded Mr. Reid's optimism. "We've had a good day," he said.
The White House postponed a planned afternoon meeting of congressional leaders with President Barack Obama, saying the schedule change would give Senate leaders time to hash out a deal.
The latest proposal would reopen the government at current spending levels until Jan. 15 and extend the federal borrowing limit until early February, according to aides familiar with the talks. Lawmakers also would begin longer-term negotiations on the budget, with the task of reaching an agreement by Dec. 13.
Even before the deal was unveiled, it provoked grumbling Monday night among restive House Republicans.
By setting up yet another series of fiscal deadlines, the agreement, if embraced, would carry the hallmark of other deadline-driven deals that have become typical of the increasingly polarized Capitol.
"Everybody realizes that whatever happens, we're going to be litigating this another day," said Sen. John Thune of South Dakota, a member of the Senate GOP leadership.
Still, a deal would mark a major breakthrough in the impasse that has gripped Washington for weeks, shutting federal agencies and threatening the government with a debt default.
Stock prices, which have been sensitive to turns in the saga, showed modest gains Monday, with the Dow Jones Industrial Average rising 64.15 points, or 0.42%, to close at 15301.26. Bond markets were closed for the Columbus Day holiday.
In Asia, shares rose early Tuesday on optimism for a deal.
The proposed agreement's framework included no major alterations to the 2010 health-care law that Mr. Obama championed and congressional Republicans have tried to curtail.
However, lawmakers appeared to be weighing some minor changes, including new procedures to verify the incomes of some people receiving government subsidies for health-insurance costs.
Lawmakers also appeared to be considering delaying for a year a fee of $63 per insured person levied on those who offer policies, including employers, unions and insurance carriers. The likely beneficiaries of the fee would be traditional insurance carriers, which are required to sell policies to everyone, regardless of medical history, and so could see customers incur major bills. Large employers and unions that provide coverage say the levy is unfair and they can't afford it, and have fought for an exemption.
One point of tension was whether the deal would include a limit that Republicans want to place on "emergency" powers that the Treasury has used to extend past debt-ceiling deadlines and avoid falling behind on the nation's bills. The dispute is significant enough that Mr. Obama raised it in a phone call Monday with Mr. McConnell, two people familiar with the call said. The Treasury department, under both Republican and Democratic administrations, has used these powers for decades to extend the amount of time the government can continue borrowing money and making payments at times when the nation has hit or neared its debt ceiling but Congress hasn't yet extended U.S. borrowing authority.
Republicans say limiting those powers would ensure that the next debt-ceiling extension is a hard deadline. But Treasury Secretary Jacob Lew has been adamant that Treasury needs the powers to maintain flexibility, in part because of how uncertain debt ceiling votes can be in Congress, two people familiar with the matter said.
Republicans who entered the budget battle determined to gut the health law have steadily scaled back their demands in the face of Democratic resistance. Still, many could find it hard to accept the Senate proposal, especially if it makes no changes to the health law.
Some House Republicans would likely resist the deal, putting House Speaker John Boehner (R., Ohio) in a tight spot.
Mr. Boehner could face a rebellion from the House's most fiscally conservative lawmakers, many of whom were elected with tea-party support. That would force Mr. Boehner to rely on Democrats to pass the Senate measure.
The lack of immediate spending cuts, as well as the absence of major changes to the health law, could prompt conservative opposition.
"I can't vote for something that doesn't have substantive spending cuts right now,'' said Rep. Joe Barton (R., Texas).
Many House Republicans declined to comment until they saw the final Senate proposal. Some still were smarting from Mr. Obama's decision to end discussions with them on Friday, which effectively sidelined the House GOP and accelerated talks in the Senate. The House offer abandoned many of the GOP's initial policy demands. It would have raised the debt ceiling for six weeks without making other policy changes. But it didn't appear to contain any explicit agreement to reopen the government immediately.
"We believed that we could have worked with the president," said Rep. Pete Sessions (R., Texas) "and then the president dropped us like a hot potato."
The potential Senate deal would do nothing for now to solve one of the biggest fiscal issues dividing the two parties: potential adjustments to the across-the-board spending cuts known as the sequester, another round of which are due in January. By funding the government only until that point, lawmakers would give themselves time to discuss changes.
First established as part of a 2011 budget deal to avert an earlier debt crisis, the sequester's next reductions would cut annual spending to $967 billion from the current $986 billion. Both parties consider the sequester a blunt budgeting tool.
Republicans want spending to fall to the level dictated by the sequester, but favor making the cuts more targeted or replacing them with savings extracted from health and safety-net programs. The GOP is particularly concerned that military spending will bear the biggest brunt of the January cuts. Democrats have sought to eliminate the scheduled cuts in part by bringing in more revenue.
Sen. Bob Corker (R., Tenn.) said that both parties will be motivated to revisit the issue before the cuts take effect. Creating pressure for lawmakers to reach an agreement by then "could bring people to a place where we solve this problem and put in place the mandatory reforms that are better for our country," he said.
Mr. Obama, speaking to reporters Monday while visiting a food and family services charity in Washington, warned that "if we don't start making some real progress both in the House and Senate…we stand a good chance of defaulting, and defaulting would have a potentially devastating effect on our economy."
The Treasury says that by Thursday it will have just $30 billion in cash left to pay bills, which would last only a week or two.
Some Republicans have argued that the party should take steps to reopen the government quickly. Many fear that the shutdown has hurt the party's image and say the GOP should move to shift the debate to deficit reduction, where public support is stronger.
"This has been a disastrous experience for the Republican Party,'' said former Sen. Judd Gregg (R., N.H.). "It is marginalized us with the American people and made us look like we don't care about governing.''
Some Republicans didn't want to reopen the government until talks with Mr. Obama had started on long-term fiscal issues. Others wanted the government to remain closed until they had extracted concessions from Democrats on the health law. It was unclear how they would react to the Senate's proposal to open the government immediately and fund it through mid-January.
The talks between Messrs. Reid and McConnell began in earnest Saturday with their first meeting since the partial government shutdown started Oct. 1. The negotiations continued over the weekend with a phone call between the two leaders on Sunday and a meeting in Mr. McConnell's office earlier Monday.
The Senate discussions arose after talks between House Republicans and the White House hit an impasse late last week. A bipartisan group of roughly a dozen senators had been working on a plan that formed the initial framework for the Senate leader's talks.
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