Congress remains snarled over debt plan with one day to go

By Mattias Gugel and Noah Bierman, The Boston Globe

Tuesday, Oct. 15, 2013 | 11:50 p.m.

WASHINGTON — With a deadline to avoid a potential default on the nation's debts mere hours away, Congress on Tuesday tumbled back into a state of disarray, risking a historic breach of borrowing limits that could threaten the nation's economy.

House Republicans began a closed-door meeting Tuesday by singing "Amazing Grace" together, but their prayer for redemption led only to more discord.

Instead of signing on to a bipartisan Senate compromise, the Republican-led House wasted crucial hours in a failed attempt to build support for an alternative measure, which, lacking enough Republican votes, was ultimately pulled from consideration.

That put the onus back on the Senate, leaving the chamber known for its arcane and time-consuming procedures just one day to beat the deadline on the nation's borrowing limit.

The new round of tug-of-war reanimated tempers in Washington, undermining several days of relative peace amid a government shutdown that has now entered its third week.

''I'm frustrated at everything," said Senator John McCain, who has been chiding both political parties throughout the ordeal. "This is terrible. Look at what the American people are being subjected to."

Financial markets, after several days of upbeat news, began to worry. One of the three major rating agencies, Fitch, placed a negative watch on the Treasury's AAA credit rating. The Dow Jones industrial average dropped 133 points.

Although it might take several days after Thursday's deadline for the nation to enter an official default, many lawmakers on both sides of the aisle said Tuesday that they took the deadline seriously and did not want to risk potential harm that even a near-miss might inflict on the economy.

''I have made clear for months and months that the idea of default is wrong. We shouldn't get anywhere close to it," said Speaker John A. Boehner, a Republican.

Boehner was once again the central player, just as he has been in previous stand-offs. As before, he found himself trying to placate the most conservative members of his party, moving further away from a compromise others had agreed to.

A bipartisan Senate plan that had been attracting support on Monday would open the government through mid-January and extend the nation's borrowing authority through early February. It would make minimal changes to President Obama's health law and set the table for broader budget negotiations between the two political parties.

House Republicans flatly rejected the plan. Instead, they floated a bill to open the government only through mid-December and extend borrowing authority through early February.

It would have restricted the Department of Treasury's ability to delay funding of various government employee benefit funds as a means of stretching dollars and extending the expiration of the debt limit when the next deadline approaches.

The House plan also would have removed health insurance subsidies for members of Congress and their staffs, who will be required under Obama's health care law to buy insurance through exchanges. The issue has symbolic power for conservative Republicans, who argue that the subsidies amount to special treatment. The subsidies were not included in the original health care law and were only added later by the administration.

''It's frustrating to me that the people who voted yes won't live with the law they passed," said Representative William P. Huizenga, a Michigan Republican.

Democrats and some Republicans say the subsidies are similar to employer subsidies many workers get in the private sector, and they worry that congressional staffer members would leave their jobs.

But even as the House plan took fire from Democrats, many conservatives objected that it did not go far enough in gutting Obama's health care law. Heritage Action for America, a Tea Party group that has been influential in crafting the GOP attempts to use the budget fights to kill the health law, urged House members to oppose Boehner's plan.

''The proposed deal will do nothing to stop Obamacare's massive new entitlements from taking root -- radically changing the nature of American health care," the group wrote in a statement on its website.

Boehner and his top deputies spent hours shuttling between offices, trying to lobby Republicans in closed-door meetings. But in the end, Boehner was forced to abandon the plan, hastily canceling a committee meeting that would have brought the measure to the floor. It was one of two plans that his members rejected on Tuesday.

Democrats, meanwhile, were furious that Boehner spent the day pursuing what proved to be futile House action rather than work with the Senate toward compromise, and some Republicans were worried.

''All of the sudden at the last minute as the train, the locomotive to avoid default is heading down the track, gaining some steam, Speaker Boehner throws a log on the path," said Senator Chuck Schumer, of New York, the third-ranking Senate Democrat, from the Senate floor.

''We are stunned by the reaction in the House," added Dianne Feinstein, a California Democrat. "People are quibbling over other things. This is just not the time to quibble."

Senate Republicans seemed just as frustrated, though not all placed the blame entirely on conservatives.

''There is no plan," fumed Senator Bob Corker, a Tennessee Republican who has been trying to forge compromise, as he emerged from a closed meeting with Senate Republicans. "The details continued to be evasive, so there never was an agreement."

McCain said Republicans were paying a heavy price for their "fool's errand" to attempt to kill Obama's health plan by shutting the government down. Now, he said, Democrats need to resist the temptation to rub it in.

''Out of hand, they categorically reject anything that might come from the House," McCain said. "That's not negotiations. That's winning."

For House Republicans, the impasse over the shutdown and the debt ceiling was beginning to resemble the stand-off over tax rates that played out late last year, when the nation was facing the so-called fiscal cliff that would raise taxes on all Americans.

Boehner could not get House Republicans to sign off on a deal with Obama to raise taxes only on those individuals earning more than $1 million a year.

In the end, just after New Years, Boehner was forced to accept a tax increase on individuals earning $400,000 or more a year. To win passage, Boehner relied on a coalition of Democrats and Republicans.

It was a lose-lose. Boehner got a worse deal for Republicans and lost political support among Republicans, some of whom tried to remove him as speaker.

Representative Adam Kinzinger, an Illinois Republican, predicted a similar outcome in the latest stand-off. He said the House would probably have to accept whatever measure the Senate approves to avoid default, meaning a loss of its bargaining power.

''Look, if my colleagues can't muster together and sometimes accept good because they're waiting for perfect, then that's on them," Kinzinger said.