President Obama is rejecting a key element of House Republicans’ latest proposal to extend the federal debt ceiling, opposing a linkage between a short-term increase and negotiations on the budget, White House spokesman Jay Carney said Friday.
Briefing reporters after financial markets closed for the week, Carney welcomed a “new willingness” among congressional Republicans to open the government and avoid default, but he said the president would not agree to tie budget negotiations to a six-week debt-limit extension.
“It is our view that we cannot have a situation where the debt ceiling is extended as part of a budget negotiation process for only six weeks, which would put us right back in the same position that we’re in now,” Carney said.
Earlier Friday afternoon, Obama spoke by telephone with House Speaker John A. Boehner (R-Ohio), and the two agreed that they should keep talking, aides to both men said without providing additional details. That conversation came hours after a meeting between Obama and Senate Republicans at the White House. Obama met with 20 House Republicans on Thursday.
Carney praised House Republicans for what he described as a “recognition that we need to remove default as a weapon in budget negotiations, that the threat of default should not be used, and certainly default itself is never an option.”
“The president appreciates the constructive nature of the conversation and of the proposal that House Republicans put forward,” Carney told reporters. “He has some concerns with it.”
Carney said: “A proposal that puts a debt-ceiling increase at only six weeks, tied to budget negotiations, would put us right back where we are today in just six weeks, on the verge of Thanksgiving and the obviously important shopping season leading up to the holidays. And that would create enormous uncertainty for our economy.”
Owners of small businesses, in a separate meeting Friday with Obama, told him that a continuing threat of default heading into the holidays “would be very damaging to them,” Carney said. “And we don’t think that’s the right way to go.”
He added: “What we think is not the right way to go is to try again to link extension of the debt ceiling to budget negotiations, and therefore link the possibility of default to whether one side gets what it wants in those negotiations.”
Carney spoke after some Senate Republicans expressed optimism Friday that a short-term deal can be reached soon to raise the federal debt limit and end the government shutdown. GOP participants said a midday meeting at the White House with President Obama was constructive even though it produced no immediate breakthrough.
The meeting came after House Republicans late Thursday submitted a revised short-term proposal to raise the debt ceiling and reopen the government, offering Obama another option amid the first signs of bipartisan progress on the issues.
Returning to the Capitol after the meeting, Republican senators described a substantive session with the president that was focused as much on a larger conversation about the nation’s fiscal problems as on a negotiation over how to reopen the government and raise the debt ceiling for just a few weeks.
Sen. Bob Corker (R-Tenn.) said: “It wasn’t a tit-for-tat or this-for-that kind of conversation. It was a more serious policy content conversation.”
“I was pleasantly surprised,” he said. “I think there’s a jelling that’s beginning to take place. I think it’s very possible that over the next short amount of time a constructive agreement may occur.”
“I don’t know that I want to talk publicly about what [the proposals] are,” he said. But he said they amounted to “a framework to go forward in a constructive way to address both the short and longer term.”
Republicans said Sen. Susan Collins (R-Maine) spent several minutes briefing Obama on a proposal she has been circulating to Democrats that would raise the debt ceiling and reopen government, but repeal the health-care law’s tax on medical devices and leave sequestration cuts in place.
“I don’t want to give the impression that he endorsed it,” but Obama indicated that there were “elements” with which he agreed, she said.
“There were many conversations on the long-term debt problem,” Collins said in a separate interview on CNN. “It was a good exchange, but it was an inconclusive exchange.”
Senators signaled that talks would continue through the day and likely through the weekend.
“It was a cordial discussion, and the president was willing to listen as well as give his point of view, so I think it was helpful,” said Sen. Rob Portman (R-Ohio).
But Sen. John Cornyn (R-Tex.) didn’t see it that way. “What could have been a productive conversation was instead another predictable lecture from the president that did not lay out a new path forward,” he said in a statement after the meeting.
While Senate Republicans were engaging with Obama over how to deal with next week’s debt-ceiling deadline and the 11-day-old government shutdown, House Republicans were waiting to hear back from the administration about the proposal they submitted late Thursday.
The House GOP’s original proposal addressed only the debt ceiling, but the revised plan deals with both the debt limit and the shutdown.
Under the new proposal, the House would vote as soon as Friday evening on a plan to raise the debt limit through Nov. 20 — the week before Thanksgiving — to create space for talks over broader budget issues. Republicans have also offered to reopen the government as soon as next week in a bill that would replace some of the deep budget cuts known as the sequester with cuts to entitlement programs, including Medicare, according to people familiar with the proposal who spoke on condition of anonymity. Replacing the sequester is a top Democratic priority, while cutting entitlement programs is a leading GOP priority. But details of the proposals were murky, and there was no clear quid pro quo linking one priority to the other.
Once the government reopens, House Republicans want Obama to enter negotiations over a longer-term debt-limit increase. In those talks, a House GOP leadership aide said, Boehner would demand that Obama address “the real drivers of our debt and deficits, including the president’s health-care law.”
Aides to House Speaker John A. Boehner (R-Ohio) declined to comment on details of the latest offer.
“As we have publicly stated, any House vote on a short-term debt limit bill is contingent on the White House and House Republicans agreeing to negotiations on a larger fiscal framework,” said Michael Steel, a spokesman for Boehner. “There is no agreement at this point on what that framework would involve, and we don’t plan to comment on the details of these discussions.”
Senate Republicans are proposing a starkly different approach, however, and it was unclear Friday which path the White House would choose.
The House GOP Conference will meet Saturday morning to discuss the effort to reach an agreement to end the impasse, a leadership aide said.
Talks between Obama and House Republicans on Thursday about a GOP-backed plan to lift the federal borrowing limit through late November raised hopes that Washington would avert its first default on the national debt.
But the two sides remained at odds over how and when to end the government shutdown, with Obama insisting that Republicans reopen federal agencies before negotiations over broader budget issues can begin.
In the Senate, top Republicans were crafting a proposal that would reopen the government and raise the federal debt limit for as long as three months — an approach closer to the terms Obama has set to end the standoff.
Obama’s meeting with the Senate’s 46 Republicans on Friday started at 11:35 a.m. and ended about an hour and a half later.
“It will be a good opportunity to engage in a frank exchange of ideas with the president – if that’s what he’s looking for,” Senate Minority Leader Mitch McConnell (R-Ky.) said on the Senate floor before the White House meeting. “But if all the president wants is to just drag us over there to say he won’t negotiate, that won’t be particularly productive.”
Obama and congressional Democrats “want to borrow more money without any strings attached,” McConnell said. “But the rest of us actually want to enact some common-sense reforms to get our debt under control, and we want to keep our commitments to the American people.”
Sen. Ted Cruz (R-Tex.), the leading advocate of defunding Obama’s health-care law in the budget debate, also attended the meeting. Before heading to the White House, he faced hecklers multiple times Friday morning during a speech at the Values Voter Summit in Washington, in which he continued to rail against the Affordable Care Act.
“If I’m never seen again [after the White House meeting], please send a search and rescue team,” Cruz joked to the crowd, saying he feared he may wake up with Syrian rebels the next day.
But some House Republicans indicated Friday that they were abandoning their original demand for changes in the health-care law as part of a short-term deal to fund the government or raise the debt ceiling — a demand that already had been virtually shelved.
Republicans are coming around to the belief that fixes to the health-care law should come as a part of a larger negotiation with Democrats and not as a condition for reopening the government, said Rep. Tom Cole (R-Okla.), a close Boehner ally.
Rep. Tim Huelskamp (R-Kan.), one of the House’s most conservative members and a frequent critic of GOP leadership, said he hears that Republicans are preparing to “capitulate on Obamacare.”
Cole predicted Friday morning that a deal could be in place to raise the debt ceiling for a few weeks and to reopen the government by the end of next week.
“I don’t know why you couldn’t have the short-term debt ceiling secured this weekend or very early next week, and, if you’re in a negotiation, I don’t know why you couldn’t have the government open by the middle or end of next week,” Cole said.
Talks with Democrats are “clearly better than they were 24 hours ago,” he said.
Both the White House and GOP lawmakers described Obama’s 90-minute session with House Republicans Thursday evening as a “good meeting” and said talks will continue.
“The president’s goal remains to ensure we pay the bills we’ve incurred, reopen the government and get back to the business of growing the economy,” the White House said in a statement.
Boehner left the session and returned to the Capitol without speaking to reporters. Majority Leader Eric Cantor (R-Va.) said the meeting was “clarifying,” even though it did not produce a resolution.
“He didn’t say yes. He didn’t say no,” said House Budget Committee Chairman Paul Ryan (R-Wis.). “We’re continuing to negotiate this evening.”
White House officials were careful not to characterize the meeting as a negotiation, after the president spent weeks publicly and privately declaring that he would not negotiate over lifting the debt ceiling. According to a Democrat familiar with the meeting, Obama agreed to review GOP proposals for reopening the government but reiterated that he would not make policy concessions.
Republicans, however, did describe the process as a negotiation. The 20 House Republicans — Boehner declined the offer to bring all 232 GOP lawmakers to the White House — gathered in the Roosevelt Room with Obama, Vice President Biden, Treasury Secretary Jack Lew and other senior officials. McConnell and Biden have been largely on the sidelines the past few weeks, despite having served as the closers for the past three large fiscal compromises.
Despite the shutdown, some furloughed federal workers returned to their jobs this week, responding to emergencies and changing policies. At least four agencies and one lawmaker have recalled personnel, citing various legal and philosophical justifications.
On Tuesday, for example, the CIA announced that it would call back thousands of employees because of concerns that an extended shutdown would start to threaten national security.
The stock market soared Thursday on signs that an end to the impasse may be at hand. The Dow Jones industrial average shot up more than 300 points to close at 15,126.07, recovering most of the value it had lost since the shutdown began Oct. 1. The Nasdaq and Standard & Poor’s 500-stock index rose more than 2 percent.
But economic confidence is down across the board, according to a new NBC/Wall Street Journal poll, which showed only 17 percent of respondents saying they think the economy will improve over the next 12 months. Adding to the gloom, furloughed federal workers on Friday received paychecks worth only half the usual amount; the checks contained one week’s pay instead of two, because the two-week period they covered included the first week of the government shutdown. If Congress does not pass a bill to fund the government before the end of next week, the next paychecks those workers receive will contain only zeros.
The House proposal that emerged Thursday would push off the threat of default until Nov. 22, but it would not end the shutdown, an idea that fell flat in the Senate with members of both parties. For the first time since the brinkmanship began in early September, McConnell waded into the fray, holding meetings with his rank-and-file members to develop a competing Senate proposal.
The package was being assembled by Collins, who said she was also talking to Senate Democrats.
“I was surprised that the House decided to deal only with the debt limit and not with the continued closure of government,” Collins said Thursday. “I think that we have to deal with both issues, and we need to do so quickly.”
Senate Democrats were intrigued by Collins’s proposal but unhappy with its demand for Democratic concessions. Those would include the repeal of a tax on medical devices that helps fund Obama’s health-care law, the Affordable Care Act, and new
income-verification procedures for people who receive tax subsidies to buy health insurance on the law’s new exchanges.
In addition, Collins’s proposal would maintain deep cuts known as sequestration through at least March, although it would grant agencies greater flexibility to decide where the cuts would fall. Sequestration remains a red flag for the White House and many Democrats, who want to restore funding for domestic programs.
Senior Democrats involved in the talks declined to comment, saying the discussion had reached a sensitive stage.
The Senate, meanwhile, is on track to vote Saturday on a separate Democratic proposal that would suspend enforcement of the debt limit through 2014. It was unclear late Thursday whether that measure would proceed or whether it would be replaced if a deal with Republicans emerged.
Even if such an agreement advanced in the Senate, it could face rough sledding in the House, where a contingent of Republicans remains committed to using the shutdown to undermine the health-care law.
Indeed, Boehner’s offer to temporarily lift the debt limit but keep the government shuttered was engineered in part to satisfy far-right conservatives, who first suggested using the threat of a shutdown to strip funding for the law. Those conservatives have grown anxious in recent days as talk of making this stand singularly about the health law died off among many rank-and-file Republicans.
On Thursday, many creators of that strategy — including Sens. Cruz and Mike Lee (R-Utah) — voiced support for Boehner’s latest gambit.
“It’s to continue [the] fight on Obamacare, to not leave that as a side issue,” said Rep. Raúl R. Labrador (R-Idaho).
Heritage Action for America, a conservative advocacy group influential with tea party Republicans, said it will not ask lawmakers to vote against raising the debt limit with no strings attached in order to refocus attention on the health-care law. The conservative Club for Growth also announced that it will look the other way on the debt limit vote.
The conservative Madison Project issued a broadside against McConnell, who faces a tough reelection campaign in 2014 and has stayed mainly on the sidelines until now.
“After remaining largely silent when conservatives were fighting Obamacare, Senator Mitch McConnell is, once again, re-emerging from the shadows to sell out conservatives in the eleventh hour,” the project’s Drew Ryun said in a statement.
GOP leaders, meanwhile, appear increasingly eager to extract the party from the health-care fight, which has not only failed to achieve its goals but also has decimated the party’s reputation among voters. According to a Wall Street Journal/NBC News survey released Thursday, 24 percent of voters have a positive view of the GOP — an all-time low in 24 years of polling.
After briefing rank-and-file lawmakers on the details of the latest strategy in a closed-door meeting Thursday, Boehner told reporters that the goal was to offer the president “a temporary increase in the debt ceiling, an agreement to go to conference on the budget, for his willingness to sit down and discuss with us a way forward to reopen the government, and to start to deal with America’s pressing problems.”
Asked which problems he hoped to address in that conversation, Boehner did not mention any specific issue, saying only, “I don’t want to put anything on the table, I don’t want to take anything off the table.”
Since the shutdown began, senior Republicans have sought to shift the debate away from the Affordable Care Act and toward goals such as overhauling the tax code and replacing sequestration with cuts to entitlement programs, including Social Security and Medicare.
“If you’re in a global negotiation over the entire budget, then [the health-care law] is part of the negotiation. But it’s probably not the only part and may not even be the central part,” said Rep. Tom Cole (R-Okla.).
The latest House GOP plan calls for suspending the debt limit until Nov. 22, the Friday before Thanksgiving. It would forbid Lew from using “extraordinary measures” to conserve cash, creating a firm deadline when Treasury would be forced to rely solely on incoming revenue to pay bills.
Before holding a vote on that plan, House leaders want Obama to agree to enter budget negotiations. Only then would they talk about reopening the government — and they declined to say what concessions they would demand for funding federal agencies.
Obama has indicated that he could support a short-term debt-limit increase, but he has also demanded that Republicans allow the government to reopen before he would negotiate.
White House press secretary Jay Carney told reporters Thursday that “the president is happy that cooler heads at least seem to be prevailing in the House, that there at least seems to be a recognition that default is not an option.” However, Carney said, “it would be far better for the economy if we stopped this episodic brinksmanship and . . . mothballed the nuclear weapon here, which is the threat of default, for a longer duration.”
Paul Kane, Debbi Wilogren, Zachary A. Goldfarb, Philip Rucker and Jackie Kucinich contributed to this report.