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Signs of Progress as Talks Continue on Fiscal Crisis Signs of Progress as Talks Continue on Fiscal Crisis
(35 minutes later)
WASHINGTON — President Obama and Congressional Republicans resumed discussions Friday aimed at forging a stopgap budget and a debt deal that might reopen the federal government and lift the threat of an American default. WASHINGTON — Republican senators emerged from a meeting at the White House on Friday afternoon expressing confidence that the government shutdown could end in a matter of days, but cautioning that details of an agreement, including the length of a debt limit extension, still needed to be resolved.
As the government shutdown entered its 11th day, Mr. Obama and Vice President Joseph R. Biden Jr. sat down with the entire Senate Republican caucus Friday morning in the State Dining Room at the White House. “I’m glad we had the discussion,” said Senator Kelly Ayotte, Republican of New Hampshire. “Now we have to put the words into action and get this resolved.”
The meeting came as some Republican senators sought to draw up an agreement to end the fiscal crisis, at least temporarily, over the objections of some of their more conservative counterparts in the House. The White House meeting followed a similar session with House Republican leaders on Thursday that both sides described as constructive and led to overnight talks by aides. Senate Republicans were still debating several options internally even as they met with Mr. Obama and Vice President Joseph R. Biden Jr. One proposal under consideration included both a stopgap spending measure and a debt ceiling extension that would last through the end of January, coupled with the promise of an immediate start to a conference for bipartisan budget negotiations focused on a broader bargain that would include spending cuts and entitlement changes.
A deal remains elusive after Speaker John A. Boehner on Thursday offered a six-week extension of the nation’s borrowing authority and Mr. Obama pressed for an end to the shutdown. The official House schedule on Friday calls for “possible consideration of legislation related to the debt limit,” but there was no evidence of an imminent agreement between the parties that could move to a vote in Congress quickly. The plan would also repeal a medical device tax, provide flexibility to government agencies on how to carry out the across-the-board spending cuts known as sequestration, and tighten the income verification rules for the new health care exchanges.
While markets on Friday seemed to react favorably, financial analysts with capital connections sought to temper the reaction. “We don’t want to be the skunk at the garden party, but we think the market might be a little too optimistic about a possible breakthrough in the debt ceiling debate,” Brian Gardner, a senior vice president in Washington for the investment banking firm Keefe, Bruyette & Woods, wrote to clients on Friday morning. Negotiations over the proposal among a bipartisan group of senators have received the blessing of Senator Harry Reid of Nevada, the majority leader. Both Senator Mitch McConnell of Kentucky, the minority leader, and Senator Charles E. Schumer of New York, the No. 3 Senate Democrat, are involved in the talks — a dynamic aides point to as a sign of optimism.
“Political hurdles remain,” he added, mainly the possibility that House Republican conservatives “may try to scuttle the Boehner plan.” Any path to compromise remains uncertain, given how firmly Democrats have insisted that they will accept nothing other than debt ceiling and budget bills that contain no Republican add-ons.
Asked about staff conversations that continued into Thursday night, a senior White House aide said, “There are no developments to read out.” A Republican leadership aide in the House offered a similar assessment, saying, “No decisions made, will pick back up today.” Even as negotiations showed some signs of progress, the Senate prepared to debate a proposal to raise the debt ceiling through next year, a move that Democrats have designed to pressure Republicans in both houses of Congress to act swiftly to avert what could be a devastating default.
The move to open debate on the debt ceiling plan, which could come as early as Friday afternoon, is only the first step in a long procedural process that would set up a final vote in the Senate early next week. Senate Republicans could still object, pushing the preliminary vote to Saturday.
But whether enough Republicans would join Democrats in support of the debt ceiling increase is unclear. And a vote to shelve the plan would be yet another setback in the slow and inconclusive talks that continue with few signs of real progress.
Six Republicans would need to break ranks with their leadership for the debt limit bill to move forward. But so far the Republican leadership has objected to any proposal that raises the debt limit with no conditions — something Democrats have insisted on, saying that they will not be pressured into making concessions with a default looming.
House Republicans continued to try to find a way to reach a deal with the White House, after they failed to agree on Thursday on a Republican plan for a six-week extension of the nation’s borrowing authority. The two sides continued to pursue other options throughout the night and into the day Friday.
Mr. Reid reiterated on Friday that the House plan was going nowhere in the Senate.
“They’re talking about extending the debt ceiling for two months,” Mr. Reid said. “Please.”
Doing so, he said, would only plunge the country into economic crisis right before the busy holiday shopping season.
“Using their theory,” he said, “we would have another one of these periods of bedlam here in Washington right before the most important purchasing season at any time during the year: Christmas.”
With Washington inching toward a resolution to the budget standoff, Republicans grappled with new polls showing that the public overwhelmingly blames them for the fiscal dispute. In an NBC/Wall Street Journal survey released Thursday evening, 53 percent of the public blamed Republicans, while 31 percent blamed Mr. Obama. Just 24 percent of those surveyed said they had a favorable opinion of Republicans.With Washington inching toward a resolution to the budget standoff, Republicans grappled with new polls showing that the public overwhelmingly blames them for the fiscal dispute. In an NBC/Wall Street Journal survey released Thursday evening, 53 percent of the public blamed Republicans, while 31 percent blamed Mr. Obama. Just 24 percent of those surveyed said they had a favorable opinion of Republicans.
Those numbers appeared certain to put pressure on Republican leaders to move in Mr. Obama’s direction. But Mr. Boehner must find a way to satisfy the hard-line conservative members in his caucus who are secure in their own districts and are not likely to pay attention to national polls. Some of those members continue to press for delay and repeal of the president’s health care law. The survey found that just 21 percent of Americans view the Tea Party movement favorably, while it suggested that Mr. Obama has received less blame for the nation’s fiscal problems. The president was viewed favorably by 47 percent of those surveyed, while 41 percent viewed him unfavorably.
The survey found that just 21 percent of Americans view the Tea Party favorably, while it suggested that Mr. Obama has received less blame for the nation’s fiscal problems. The president is viewed favorably by 47 percent of those surveyed, while 41 percent view him unfavorably.
Perhaps motivated by those numbers, Republicans on Friday sounded more conciliatory than they had during weeks of often angry words from both sides in the tense budget standoff.Perhaps motivated by those numbers, Republicans on Friday sounded more conciliatory than they had during weeks of often angry words from both sides in the tense budget standoff.
“We decided that it would be best moving forward if we focused on moving forward,” Representative Howard “Buck” McKeon, Republican of California, said on MSNBC’s “Morning Joe” program. “People here want to do what’s right.” “We decided that it would be best moving forward if we focused on moving forward,” said Representative Howard “Buck” McKeon, Republican of California, on MSNBC’s “Morning Joe” program. “People here want to do what’s right.”
He added, “At the end of the day, we are going to get this worked out, and hopefully it will be good for the nation.”He added, “At the end of the day, we are going to get this worked out, and hopefully it will be good for the nation.”
The positive tone, a break from weeks of acrimony, carried over from Thursday, when House Republicans described their meeting with Mr. Obama as “a useful and productive conversation.”The positive tone, a break from weeks of acrimony, carried over from Thursday, when House Republicans described their meeting with Mr. Obama as “a useful and productive conversation.”
People familiar with the meeting said that Mr. Obama pressed Republicans to reopen the government, and that Republicans raised the possibility that financing could be restored by early next week if terms for broad budget negotiations could be reached.
Twenty Republicans, led by Speaker John A. Boehner, went to the White House at Mr. Obama’s invitation after a day of fine-tuning their proposal to increase the Treasury Department’s authority to borrow money to pay existing obligations through Nov. 22. The government is expected to reach its borrowing limit next week. In exchange, they sought a commitment by the president to negotiate a deal for long-term deficit reduction and a tax overhaul.
The president “didn’t say yes, didn’t say no,” said Representative Paul D. Ryan, Republican of Wisconsin and chairman of the House Budget Committee. He added, “We agreed to continue talking and continue negotiating.”The president “didn’t say yes, didn’t say no,” said Representative Paul D. Ryan, Republican of Wisconsin and chairman of the House Budget Committee. He added, “We agreed to continue talking and continue negotiating.”
Still, the House Republican offer represented a potentially significant breakthrough. Even if Democrats found fault with the Republicans’ immediate proposal — for example, it would prevent the Treasury secretary from engaging in accounting maneuvers to stave off potential default — it was seen as an opening gambit in the legislative dance toward some resolution before the government is expected to breach its debt limit on Thursday.
After some fretful weeks, the Democrats believe, Mr. Obama was seeing some payoff for his big gamble this year. Burned by his experience with House Republicans in mid-2011, when brinkmanship over the debt limit hobbled the already weak economy, Mr. Obama began his second term vowing never again to negotiate over raising the ceiling or to give any concessions to Republicans for performing an act that is their constitutional responsibility.After some fretful weeks, the Democrats believe, Mr. Obama was seeing some payoff for his big gamble this year. Burned by his experience with House Republicans in mid-2011, when brinkmanship over the debt limit hobbled the already weak economy, Mr. Obama began his second term vowing never again to negotiate over raising the ceiling or to give any concessions to Republicans for performing an act that is their constitutional responsibility.
“The good news is that Republicans have accepted the principle that they’re not going to attach conditions to the debt ceiling,” said Representative Chris Van Hollen of Maryland, the senior Democrat on the House Budget Committee. “The bad news is they’ve only extended the debt ceiling for six weeks.”
For House Republicans, the maneuvers represented a near-reversal of their original strategy in September of going to the mat over the debt limit but not shutting down the government. Now, under pressure from falling poll numbers and angry business supporters, they are seeking a compromise on the debt ceiling. Yet for now, they are still refusing to finance and reopen the government without some concessions.
Mr. Boehner and his colleagues left the White House without speaking to waiting reporters, and quickly gathered in his Capitol suite for further discussion. Their debt limit proposal could come to a vote as soon as Friday.
Senate Democrats had their own White House meeting with Mr. Obama and Vice President Joseph R. Biden Jr. three hours before the House Republicans arrived, and the majority leader, Senator Harry Reid of Nevada, declined to embrace the Republicans’ debt limit proposal until he saw it. He told reporters that Democrats would not negotiate on further deficit reductions until House Republicans agreed to the measure passed by the Senate to finance and open the government through mid-November.
“Not going to happen,” Mr. Reid said. “Open the government,” he added. “There is so much pain and suffering out there. It is really tear-jerking, to say the least.”
Separately, members of the Senate’s Republican minority, who are to meet with Mr. Obama on Friday, worked on a proposal for full-year government financing — at levels reflecting the across-the-board spending cuts known as sequestration, but giving agencies flexibility to shift money around. They are considering adding it to any short-term debt limit increase that the House might pass and send to the Senate.
Mr. Ryan said before the White House meeting that Republicans were now willing to formally negotiate with Senate Democrats over a long-term, comprehensive budget framework. The Republicans have resisted such a move since April, fearing that it would require compromises, like raising additional tax revenues, that would enrage the party’s conservative base heading into the 2014 midterm elections.
Many House Republicans, leaving a closed-door party caucus earlier Thursday that at times grew contentious, said they would support their leadership’s short-term debt limit proposal. But they said they would do so only if Mr. Obama agreed to negotiate a broader deficit reduction deal, with big savings from entitlement programs.
The president has insisted he will not agree to significant reductions in projected Medicare and Medicaid spending — even his own tentative proposals — unless Republicans agree to raise revenues by curbing tax breaks for corporations and wealthy individuals. And Mr. Boehner in recent days reaffirmed the party’s antitax stance, which suggests that future talks could founder.The president has insisted he will not agree to significant reductions in projected Medicare and Medicaid spending — even his own tentative proposals — unless Republicans agree to raise revenues by curbing tax breaks for corporations and wealthy individuals. And Mr. Boehner in recent days reaffirmed the party’s antitax stance, which suggests that future talks could founder.
Economists across a broad spectrum agree that breaching the debt limit would damage the economy. The new Republican proposal could temporarily remove that threat. Economists across a broad spectrum agree that breaching the debt limit would damage the economy. Any temporary extension of the borrowing authority could temporarily remove that threat.

Jackie Calmes contributed reporting.