U.S. default grows closer
WASHINGTON — Republicans and Democrats in Congress lumbered through a day of political maneuvering Saturday while a threatened default by the Treasury crept uncomfortably closer and a partial government shutdown neared the end of its second week.
“We haven’t done anything yet” by way of compromise, Majority Leader Harry Reid, D-Nev., said after Senate leaders took control of efforts to end the impasse, although he and other Democrats said repeatedly there was reason for optimism.
Across the Capitol, tea party caucus Republican Rep. John Fleming of Louisiana said there was “definitely a chance that we’re going to go past the deadline” on Thursday that Treasury Secretary Jack Lew has set for Congress to raise the $16.7 trillion debt limit.
Lawmakers in both parties said they were watching for the reaction to the political uncertainty by the financial markets when they reopen after the weekend.
President Barack Obama met with Senate Democratic leaders at the White House after accusing Republicans of practicing the politics of extortion. “Manufacturing crises to extract massive concessions isn’t how our democracy works, and we have to stop it,” Obama said in his weekly radio and Internet address.
Ironically, though, House Republicans who triggered the shutdown with tea party-driven demands to eradicate Obama’s health law conceded that they had temporarily been reduced to virtual bystander status.
“The Senate needs to hold tough,” Rep. Greg Walden, R-Ore., quoted Speaker John Boehner, R-Ohio, as telling the GOP rank and file in a private meeting. “The president now isn’t negotiating with us.”
The effects of the partial government shutdown varied widely, and in some cases, states and outsiders were stepping in.
The White House, drawing attention to the effects of the partial shutdown on government research, noted that four of five Nobel Prize-winning scientists working for the federal government had to be furloughed. It said two-thirds of the employees at the Centers for Disease Control have had to stay home.
Amid meetings in Washington of world finance officials, the International Monetary Fund’s policy committee said the U.S. needs to take “urgent action” to address the impasse. World Bank President Jim Yong Kim stressed the urgency for Washington policymakers to reach agreement on raising the debt ceiling before the Thursday deadline set by Lew, saying the economic fallout of failing to act could include increased interest rates, slower global economic growth and falling business confidence.
One day after talks between the White House and House Republicans fizzled, the focus turned to the Senate.
There, a meeting of Reid, GOP leader Mitch McConnell of Kentucky and two other lawmakers produced no immediate sign of progress. Later, Reid and his top lieutenants — Sens. Chuck Schumer, Patty Murray and Dick Durbin — spent more than an hour at the White House with Obama and senior White House aides, including Obama’s chief of staff, Denis McDonough. The leaders left without speaking and the White House offered no summary of the meeting.
The president’s party rejected a stab at compromise led by GOP Maine Sen. Susan Collins, while Republicans blocked the advance of a no-strings attached measure the Democrats drafted to let the Treasury resume normal borrowing. The party line vote was 53-45, seven short of the 60 required.
In disagreement was a pair of issues, both important and also emblematic of a broader, unyielding dispute between the political parties over spending, taxes and deficits.
Lew has said that without legislation to raise the nation’s $16.7 trillion debt limit, default was possible any day, and with it, a calamitous impact on the economy.
A separate measure was needed to reopen the government fully after 12 days of a partial shutdown that has resulted in furloughs for 350,000 federal workers and that administration officials warn could spread hardship if it remains in effect.
Politicians agreed passage of both was essential.
But Republicans demanded concessions that Democrats were unwilling to give — unless they could get something in return.
Officials in both parties said that Democrats had raised the possibility with Republicans of a long-term spending bill that included deficit savings that could replace some or all of the across-the-board spending cuts that began taking effect at the beginning of the year.
The political calculations were evident. Polls show all portions of the electorate except tea party supporters are increasingly displeased, and Republicans are bearing the brunt of their unhappiness.
“Perhaps he sees this as the best opportunity for him to win the House in 2014,” Fleming said of the president. “It’s very clear to us he does not now, and never had, any intentions of negotiating.”
Reid was savage.
Republicans had begun seeking concessions on health care, he said, and now their No. 1 issue is “to divert attention from the fools they’ve made of themselves on Obamacare.”
House Democrats lined up en masse to sign a legislative petition calling on Boehner to allow a vote on a bill to reopen the government, a step he has repeatedly refused to take.
In his Saturday address, Obama said, “Politics is a battle of ideas, but you advance those ideas through elections and legislation — not extortion.”
Collins’ suggested compromise had gained traction in recent days, before Reid told McConnell it was a nonstarter.
In a statement, the Maine Republican called the response unfortunate, and said talks on the plan involving senators of both parties “were constructive and give me hope that a bipartisan solution to reopen government and prevent default is within our reach.”
It could have raised the debt limit through Jan. 31 and reopened the government for six months.
At the same time, it would have granted federal agencies flexibility in adjusting to the across the board cuts, and made two changes in the health care law.
One would have set new income verification conditions on individuals applying for federal subsidies for coverage; the other would have suspended a medical device tax for two years.
Associated Press writer Jim Kuhnhenn contributed to this report.