Live updates: House plan to avert debt default falls apart — again
As the U.S. heads toward a debt default, conservatives are digging in deeper
UPDATE: 7:27: EST: With the House in disarray, Senate Majority Leader Harry Reid (D-Nev.) and Minority Leader Mitch McConnell (R-Ky.) are going back to work on the tentative compromise they reached Monday night.
Any final deal would still need Speaker John Boehner's (R-Ohio) help to clear the House, too, and head to the president's desk.
UPDATE: 6:08 EST: As expected, tonight's vote has now been canceled, according to National Review's Robert Costa.
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After a full day of the House GOP leadership vowing to come up with a "fairer" approach than the Senate plan, those efforts proved unsuccessful. Though Boehner had hoped to bring a bill up for a vote tonight, conservative members strenuously objected to the details of the final plan, leaving it without enough votes to pass.
As has been Boehner's problem all along, he cannot get the restive right wing of his party to support anything short of a significant ransom list, and he's been unwilling to buck those lawmakers for fear of losing his job. His only option now, as it has been for some time, may be to work with Democrats and accept his fate — or let the nation default on its financial obligations.
UPDATE: 5:56 EST: In yet another blow to Speaker Boehner (R-Ohio) and the GOP establishment, the House Rules Committee postponed a scheduled hearing on a last-ditch bill to end the fiscal impasse, a sign that, yet again, leadership did not have the votes to advance their own legislation.
The Rules Committee was supposed to quickly move the bill — which the GOP scrambled to draft today in response to an emerging Senate deal — to allow the House to then vote on the final package tonight, preempting the Senate. That vote, apparently, is now off.
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The Senate put its own talks on hold to give the House time to work on their proposal. If the House plan does indeed fall through, the Senate will have to work fast to push through their original compromise — and then hope the House follows suit.
UPDATE: 4:56 EST: Ratings agency Fitch has put the nation's AAA credit rating on negative watch — a warning that the agency is prepared to downgrade America's credit rating if Congress can't reach a deal before Thursday's debt ceiling deadline. Fitch also affirmed, contrary to what some have claimed, that the finance world views October 17 as a hard deadline to raise the nation's borrowing limit.
From a press release announcing the warning:
Although the Treasury would still have limited capacity to make payments after 17 October it would be exposed to volatile revenue and expenditure flows. The Treasury may be unable to prioritize debt service, and it is unclear whether it even has the legal authority to do so. The U.S. risks being forced to incur widespread delays of payments to suppliers and employees, as well as social security payments to citizens - all of which would damage the perception of U.S. sovereign creditworthiness and the economy.
The prolonged negotiations over raising the debt ceiling (following the episode in August 2011) risks undermining confidence in the role of the U.S. dollar as the preeminent global reserve currency, by casting doubt over the full faith and credit of the U.S. This "faith" is a key reason why the U.S. 'AAA' rating can tolerate a substantially higher level of public debt than other 'AAA' sovereigns. [Fitch]
UPDATE: 4:44 EST: And there it is. The House Rules Committee will meet at 5:40 tonight to move the GOP's bill to a full floor vote, per multiple reports. Here's the text of the legislation.
UPDATE: 4:36 EST: A Senate GOP aide expressed disappointment to The New Yorker's Ryan Lizza that the linchpin for the emerging House plan, known as the Vitter amendment, would end federal subsidies for hill staffers' health insurance.
UPDATE: 4:30 EST: Stocks tumbled by the end of the day amid uncertainty over the debt ceiling. The Dow closed down 133 points.
UPDATE: 4:27 EST: House Republicans suggested earlier in the day they could vote on a last-ditch plan and then skip town, forcing the Senate to go along with them or trigger a shutdown. Republicans, believe it or not, may not be bluffing:
UPDATE: 3:50: A Pew poll out Tuesday shows, as many polls have before it, the GOP taking a huge hit from the government shutdown.
In the poll, Americans blame the GOP for the shutdown and fiscal stalemate by a nine-point margin. At the same time, congressional Republicans' approval rating has slipped to 20 percent, and almost six in ten Americans now have an unfavorable opinion of the party as a whole.
The poll also shows why congressional GOPers may be willing to risk a debt default: A 52 percent majority of Republicans in the survey say the nation can pass the debt limit "without major economic problems," while 37 percent say the debt ceiling doesn't ever need to be raised.
UPDATE: 3:39 EST: House Republicans are prepared to move ahead with a new plan, though even they admit they're unsure if it has the votes to pass.
The new plan would raise the debt ceiling until February 7, and fund the government until December 15, according to multiple reports. The Senate's tentative bipartisan plan called for an additional month of funding.
The bill would also nix a repeal of a medical device tax and income verification provision contained in the previous proposal, while adding instead a provision known as the Vitter Amendment to strip federal subsidies for lawmakers and staff members to purchase health insurance.
In other words, the great debt ceiling debate could hinge on whether aides in Congress get employer-subsidized health insurance.
The House Rules Committee is expected to announce and then take up the proposal shortly.
UPDATE: 1:30 EST: Should the House successfully pass a counteroffer today, GOP leadership has suggested the entire Republican caucus may then flee Washington in an attempt to force the Senate to act on their measure, according to Politico. If the House isn't around for last-minute negotiations, the thinking goes, the Senate would be forced to crack.
The House GOP is still tinkering with its proposal. Speaker John Boehner (R-Ohio) said Tuesday morning he hoped to have a vote later the same day.
UPDATE: 1:13 EST: White House Press Secretary Jay Carney reaffirmed Tuesday during a scheduled briefing that President Obama and Democratic leaders were committed only to supporting a fiscal deal that "does not have partisan strings attached."
"We're encouraged by the progress that we've seen in the Senate, but we're far from a deal at this point," he added.
Meanwhile in the Senate, Minority Leader Mitch McConnell (R-Ky.) reportedly put his talks with Majority Leader Harry Reid (D-Nev.) on hold to first see where the House goes with its developing counteroffer, possibly scuttling hopes for a quick Senate deal that would put more pressure on the House to raise the debt ceiling.
UPDATE: 12:39 EST: Since their counteroffer to the Senate's bipartisan deal fell apart Tuesday morning, House GOP members are back at work trying to come up with a revised solution.
Once Democrats — and reportedly even a large share of the House GOP caucus — shot the plan down, Boehner and company went back the drawing board. In addition to opening the government and raising the debt ceiling, the framework of the original proposal would have denied lawmakers and their staffs from being exempt from ObamaCare; delayed for two years a tax on medical devices; and barred the the Treasury from "using accounting gimmicks known as 'extraordinary measures'" to avoid a debt default.
Now, Republicans are calling the original plan a "working document" that will ultimately include more GOP-friendly pieces. So what could that entail? At this point, almost anything — including the Vitter Amendment and a so-called "conscience clause" to allow employers who provide health insurance to forego covering birth control, as is required under ObamaCare.
The Vitter amendment, for those unfamiliar, would strip federal insurance subsidies for lawmakers' employees and force them to find coverage through the ObamaCare insurance exchanges. It's thus "a large de facto pay cut," according to Slate's Matthew Yglesias, who adds that the idea is "really dumb."
Though nixing subsidies for staff members may sound counterintuitive, Republicans like the idea because they think it exposes more flaws in ObamaCare.
Some observers were incredulous that the GOP would link birth control to a move to raise the debt ceiling. Here's The Huffington Post's Amanda Terkel:
UPDATE: 12:06 EST: More reports now indicate the House GOP did not have the support of its own caucus for its emerging counteroffer.
UPDATE: 12:00 EST: Democratic leaders tore into the GOP counteroffer, and insisted it had zero chance of passing the Senate. Reid accused "extremist Republicans" of "attempting to torpedo the Senate's bipartisan progress," adding that their "awful bill is doomed for failure." He also took to the Senate floor to reiterate: "Let's be clear, the House legislation will not pas the Senate."
House Minority Leader Nancy Pelosi (D-Cali.), meanwhile, led her leadership team in a press conference to denounce her Republican counterparts.
ORIGINAL: Less than 24 hours after the Senate reported "substantial progress" toward ending the government shutdown and raising the debt ceiling with a bipartisan compromise, House Republicans seemingly put the kibosh on the plan — and hard.
With furious House conservatives in full revolt over what they view as a betrayal by their Republican colleagues in the Senate, the House GOP leadership moved to draft their own counteroffer.
Yet in a cagey press conference late Tuesday morning, Speaker John Boehner (R-Ohio) backed off from endorsing the emerging framework of his caucus' own plan, leaving in doubt where negotiations stand with less than 48 hours to go before the nation hits the debt ceiling.
On Monday, Senate Majority Leader Harry Reid (D-Nev.) and Minority Leader Mitch McConnell (R-Ky.) reached a tentative agreement to fund the government until January 15 and raise the debt ceiling until early February, while gently tweaking ObamaCare and paving the way for budget talks.
But overnight, House conservatives decried the emerging framework as a complete GOP cave. From National Review's Robert Costa:
A flurry of phone calls and meetings last night and early this morning led to that consensus among the approximately 50 Republicans who form the House GOP's right flank. They're furious with Senate Republicans for working with Democrats to craft what one leading tea-party congressman calls a "mushy piece of s**t." Another House conservative warns, "If Boehner backs this, as is, he's in trouble." [National Review]
The House reportedly then began work on their own counteroffer, framing it as a plan to "make the Senate agreement fairer for the American people." Yet Boehner, squeezed by restive Tea Partiers and legislative reality, apparently may not even have the votes in his own caucus for that deal, according to the Washington Post. And the White House emphatically blasted it as a "ransom" and a "partisan attempt to appease a small group of Tea Party Republicans for forced the government shutdown in the first place."
Again boxed in on both the right and left, Boehner and the House GOP leadership held a press conference to announce they had yet to settle on a path forward, suggesting that the House GOP's plan had fallen apart in a matter of hours.
"There have been no decisions on what, exactly, we will do," Boehner said, adding he hoped to "try to find a way to go forward today."
Jon Terbush is an associate editor at TheWeek.com covering politics, sports, and other things he finds interesting. He has previously written for Talking Points Memo, Raw Story, and Business Insider.