October 10, 2013

House G.O.P. Discusses Short-Term Fix on Debt Limit

By JONATHAN WEISMAN, JACKIE CALMES and ANNIE LOWREY

WASHINGTON — House Republicans, looking for a way out of a budget standoff they began, are coalescing around a plan that would raise the debt limit through Nov. 22, which they will present to President Obama at a meeting at the White House on Thursday afternoon.

The White House indicated that while the president might sign a short-term bill to avert default, it rejected the proposal as insufficient to begin negotiations over his health care law or further long-term deficit reductions because the plan does not address the measure passed by the Senate to finance and reopen the government.

“The president has made clear that he will not pay a ransom for Congress doing its job and paying our bills,” said a White House official, speaking on the condition of anonymity.

Though Mr. Obama indicated this week that he would sign a short-term extension in the nation’s borrowing authority, he is still pressing for a Democratic Senate proposal to extend the debt limit for a full year with no “extraneous political strings attached,” the official said. But without an agreement to also end the shutdown, the president will not negotiate on other issues, the official said.

“Once Republicans in Congress act to remove the threat of default and end this harmful government shutdown, the president will be willing to negotiate on a broader budget agreement to create jobs, grow the economy, and put our fiscal house in order,” the official said, echoing the president’s own oft-stated words. “While we are willing to look at any proposal Congress puts forward to end these manufactured crises, we will not allow a faction of the Republicans in the House to hold the economy hostage to its extraneous and extreme political demands. Congress needs to pass a clean debt limit increase and a funding bill to reopen the government.”

While the back-and-forth dampened hopes of a truce soon, the maneuvering did suggest that Congressional Republicans, whose leaders will meet with Mr. Obama at the White House later Thursday, want to end a potentially calamitous standoff for which polls show they are getting more of the blame from the public.

Representative John Fleming, Republican of Louisiana, said that Republican leadership said they would not put the extension on the floor for a vote unless Mr. Obama agreed to sit down and negotiate with Republicans on a broader deal.

Economists across a broad spectrum agree that violating the debt limit — which could happen as early as next week, absent Congressional action — would probably severely damage the economy. The new Republican proposal could temporarily remove that threat.

Treasury Secretary Jacob J. Lew implored Congress on Thursday to raise the debt ceiling, warning the Senate Finance Committee of potentially severe market and economic repercussions if it did not.

In testimony before the committee, Mr. Lew stressed that the Treasury Department would run out of “extraordinary measures” to free up cash in a matter of days. At that point, the country’s bills might overwhelm its cash on hand in addition to any receipts from taxes or other sources, leading to an unprecedented default.

Mr. Lew said that Treasury had no workarounds to avoid breaching the debt ceiling. “There is no plan other than raising the debt limit,” he said. “The legal issues, even regarding interest and principal on the debt, are complicated.”

In not addressing the shutdown, Republicans would keep pressure on Democrats to negotiate on a package of deficit reduction and tax overhaul proposals.

Representative Tim Griffin, Republican of Arkansas, said that the plan the speaker presented appealed to him because it would give House Republicans some breathing room as they continued to try to plot their next steps.

“What we’re looking at here is a short-term — what some would call short-term — debt ceiling increase, so that we can keep talking without all of the potential issues hitting our ceiling.”

Republican leadership jumped on the plan, presented on Wednesday by Representative Paul D. Ryan of Wisconsin, chairman of the House Budget Committee.

Representative Mark Meadows, a freshman Republican from North Carolina who was an initial champion of the “defund Obamacare” movement, said he was in favor of the new strategy.

“Really, what this is all about is negotiating and finding common ground,” he said. “This looks like a window to be able to do that, and I’m supportive.”

Meantime, a group of Republican senators began meeting with Senator Mitch McConnell of Kentucky, the Republican leader, to find a bipartisan solution to the twin fiscal impasses.

The senators are examining a yearlong resolution funding the government at levels that reflect automatic spending cuts known as sequestration, but with added flexibility to help government agencies and departments deal with the tight budgets. The debt ceiling would also be raised.

During the Senate hearing, Republicans chastised the administration for focusing on the debt limit more than the country’s debt, and for refusing to negotiate. Democrats and Republicans generally talked past one another at the hearing, with little agreement on how to raise the ceiling and how to manage the budget.

If the Obama administration would not negotiate over entitlement programs like Medicare now, “when will they negotiate?” asked Senator Orrin Hatch, Republican of Utah.

Mr. Lew said that the Obama administration would be willing to sit down and negotiate longer-term budgetary changes, but would not tie such negotiations to the debt ceiling. He would not say how long or how big of a debt-ceiling increase the administration wanted.