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Obama Sounds Alarm on Debt as Senators See a Deal in Reach Senators Closer to a Deal on Debt Ceiling and Shutdown
(35 minutes later)
WASHINGTON — A bitterly divided Congress edged closer to a budget and debt deal on Monday, while the rest of the world braced for the possibility of a legislative failure and an economic catastrophe that could ripple through financial markets, foreign capitals, corporate boardrooms, state budget offices and the bank accounts of everyday investors.WASHINGTON — A bitterly divided Congress edged closer to a budget and debt deal on Monday, while the rest of the world braced for the possibility of a legislative failure and an economic catastrophe that could ripple through financial markets, foreign capitals, corporate boardrooms, state budget offices and the bank accounts of everyday investors.
Democratic and Republican leaders in the Senate were close late Monday to an agreement that would increase the nation’s borrowing authority and provide enough money to operate the government until the end of the year. President Obama praised the Senate’s progress, but issued a blunt warning to lawmakers about the possibility that the deal could yet founder in the House.Democratic and Republican leaders in the Senate were close late Monday to an agreement that would increase the nation’s borrowing authority and provide enough money to operate the government until the end of the year. President Obama praised the Senate’s progress, but issued a blunt warning to lawmakers about the possibility that the deal could yet founder in the House.
“This week, if we don’t start making some real progress, both the House and the Senate, and if Republicans aren’t willing to set aside their partisan concerns in order to do what’s right for the country, we stand a good chance of defaulting, and defaulting could have a potentially devastating effect on the economy,” Mr. Obama said. “This week, if we don’t start making some real progress, both the House and the Senate, and if Republicans aren’t willing to set aside their partisan concerns in order to do what’s right for the country, we stand a good chance of defaulting, and defaulting could have a potentially devastating effect on the economy,” Mr. Obama said at Martha’s Table, a Washington food bank.
Mr. Obama and Vice President Joseph R. Biden Jr. had been scheduled to meet with top Democratic and Republican leaders in Congress on Monday afternoon, but the meeting was postponed “to allow leaders in the Senate time to continue making important progress towards a solution that raises the debt limit and reopens the government,” according to a statement from the White House. Senator Harry Reid of Nevada, the majority leader, and Senator Mitch McConnell of Kentucky, the Republican leader, on Monday neared completion of a framework for a deal.
Senate talks were expected to accelerate, with the aim of sealing an agreement by Tuesday, two days before the federal government exhausts its borrowing authority. The biggest question is whether bipartisan support in the Senate would be enough to force House Republicans to bring the deal to a vote, given the insistence by some House conservatives that major elements of the health care law needed to be delayed. Senate negotiators were still talking late into the afternoon, but both parties were coalescing around a plan that would lift the debt limit through Feb. 7, pass a resolution to finance the government through Jan. 15 and call for the two parties to conclude formal discussions on a long-term tax and spending plan no later than Dec. 13, according to one Senate aide briefed on the outlines of the plan.
The president added pressure to the urgent negotiations on Capitol Hill as the Thursday deadline for raising the nation’s borrowing authority approached. Any provision to delay or repeal a tax on medical devices – a sticking point in the negotiations – will almost certainly be excluded from the final deal, Senate aides said. Republicans sought to have the tax eliminated or pushed back, but Democrats strongly resisted.
Mr. Obama said there had been “some progress” in the Senate toward a deal that could avert a breach of the nation’s debt limit. He said some Republicans recognized that “it’s not tenable, it’s not smart, it’s not good for the American people to let America default.” The deal would include a one-year delay of another tax associated with the Affordable Care Act known as the reinsurance tax, which employers pay.
Shortly after 2 p.m., Senator Harry Reid of Nevada, the majority leader, and Senator Mitch McConnell of Kentucky, the Republican leader, spoke on the Senate floor and made their most upbeat remarks yet about the progress of their talks. Another Republican-backed measure would require tighter income verification standards for people who receive subsidies under the new health care law. Under the new guidelines, the Health and Human Services secretary would have to certify that the department can verify income eligibility.
The timing of a vote – which seems likely to come right up against Thursday, the date the Treasury has said the country will exhaust its borrowing authority – is unclear. If, for instance, Democrats and Republicans shake hands on a deal on Monday and Mr. Reid is able to get consent from all of the Republicans, a vote could occur within hours; if any senator objects, however, the earliest a vote could occur is Friday.
Democrats would like to bring any deal to the floor for a vote on Wednesday. Passing the plan on Wednesday, aides say, would not only avert the possibility of a devastating fiscal default, but would also put pressure on the Republican-controlled House to pass whatever bill the Senate sends over, or risk being blamed for a debt default.
Shortly after 2 p.m. on Monday, Mr. Reid and Mr. McConnell spoke on the Senate floor and made their most upbeat remarks yet about the progress of their talks.
“I’m very optimistic that we will reach an agreement that’s reasonable in nature this week,” Mr. Reid said, using unusually warm terms to describe Mr. McConnell. “I deeply appreciate my friend the minority leader for his diligent efforts to come to an agreement.”“I’m very optimistic that we will reach an agreement that’s reasonable in nature this week,” Mr. Reid said, using unusually warm terms to describe Mr. McConnell. “I deeply appreciate my friend the minority leader for his diligent efforts to come to an agreement.”
Mr. McConnell spoke next, calling their exchanges over the last few days “very constructive.” He added, “Those discussions continue, and I share his optimism that we’re going to get a result that will be acceptable to both sides.”Mr. McConnell spoke next, calling their exchanges over the last few days “very constructive.” He added, “Those discussions continue, and I share his optimism that we’re going to get a result that will be acceptable to both sides.”
House Republicans worked on a separate track to quickly pass a six-week extension of the government’s statutory borrowing authority. But Republican leaders were pushing significant changes to the health care law, possibly language denying federal subsidies to lawmakers, White House officials and staff members who must buy their health insurance on the Affordable Care Act’s new exchanges.House Republicans worked on a separate track to quickly pass a six-week extension of the government’s statutory borrowing authority. But Republican leaders were pushing significant changes to the health care law, possibly language denying federal subsidies to lawmakers, White House officials and staff members who must buy their health insurance on the Affordable Care Act’s new exchanges.
Senate Democrats and the White House have made it clear that such policy changes will never clear the Senate.Senate Democrats and the White House have made it clear that such policy changes will never clear the Senate.
As they drafted their deal, Senate negotiators in both parties were hoping that House Republican leaders would have no choice but to let a bipartisan agreement struck on the verge of default come to a vote, even if it could only pass with votes from Democrats and a minority of the Republican majority. The deal is likely to include two concessions to Republicans: a two-year delay of a tax on medical devices that helps pay for the health care law, and some tightening of qualifications for subsidized insurance purchases.As they drafted their deal, Senate negotiators in both parties were hoping that House Republican leaders would have no choice but to let a bipartisan agreement struck on the verge of default come to a vote, even if it could only pass with votes from Democrats and a minority of the Republican majority. The deal is likely to include two concessions to Republicans: a two-year delay of a tax on medical devices that helps pay for the health care law, and some tightening of qualifications for subsidized insurance purchases.
But the main sticking points revolve around two dates: when a stopgap spending bill that reopens the government would end, and how far into 2014 a debt ceiling increase would last. Democrats had insisted that the spending measure extend only into mid-November, to force a quick renegotiation of spending for next year. The Democrats’ bottom line, however, is that it ends before Jan. 1, when the next round of automatic spending cuts, known as sequestration, kicks in. The final deal is likely to extend government financing only into December.
Republican negotiators were willing to extend borrowing authority to Jan. 31. That is likely to extend further, into February.
Republicans accused Democrats of accepting nothing short of capitulation without offering anything in return. “The Democrats keep moving the goal posts,” Senator Susan Collins of Maine, one of the lead Republican negotiators, said Sunday. “Decisions within the Democratic conference are constantly changing.”Republicans accused Democrats of accepting nothing short of capitulation without offering anything in return. “The Democrats keep moving the goal posts,” Senator Susan Collins of Maine, one of the lead Republican negotiators, said Sunday. “Decisions within the Democratic conference are constantly changing.”
Senator John McCain, Republican of Arizona, warned on the CBS News program “Face the Nation” that the Democrats “better understand something.”Senator John McCain, Republican of Arizona, warned on the CBS News program “Face the Nation” that the Democrats “better understand something.”
“What goes around comes around,” he said, “and if they try to humiliate Republicans, things change in American politics.”“What goes around comes around,” he said, “and if they try to humiliate Republicans, things change in American politics.”
A rally on the National Mall on Sunday, led by Senator Ted Cruz, Republican of Texas, and former Gov. Sarah Palin of Alaska, was intended to show that Tea Party activists — supporters of the House Republicans who forced the shutdown over their opposition to the new health care law — were in no mood to give in. Some waved Confederate flags and called for Mr. Obama to be impeached.A rally on the National Mall on Sunday, led by Senator Ted Cruz, Republican of Texas, and former Gov. Sarah Palin of Alaska, was intended to show that Tea Party activists — supporters of the House Republicans who forced the shutdown over their opposition to the new health care law — were in no mood to give in. Some waved Confederate flags and called for Mr. Obama to be impeached.
The dispute may involve debt ceiling technicalities, but at the core of the fight is a more fundamental question: with polls showing that Republicans are carrying the brunt of the blame for the shutdown, can Democrats demand total surrender, or should they offer concessions to complete the deal?The dispute may involve debt ceiling technicalities, but at the core of the fight is a more fundamental question: with polls showing that Republicans are carrying the brunt of the blame for the shutdown, can Democrats demand total surrender, or should they offer concessions to complete the deal?
“You can’t just demand pure capitulation,” said Representative Tom Cole, Republican of Oklahoma. “Negotiations don’t work that way.”“You can’t just demand pure capitulation,” said Representative Tom Cole, Republican of Oklahoma. “Negotiations don’t work that way.”