House Republicans have unveiled a plan to temporarily hike the debt ceiling for six weeks, while the government would remain closed until a deal is reached with the White House on a long-term budget package.
“It is our hope that the president will look at this as an opportunity and a good-faith effort on our part to move halfway, halfway to what he’s demanded in order to have these conversations begin,” House Speaker John Boehner (R-OH,8) said of the proposal.
Under the plan, the new debt ceiling deadline would be November 22 and Boehner says there is no guarantee that the country would not be back at another impasse on the debt ceiling after the short-term extension is up.
“Clearly, you could end up back in the same place, and we don’t want to be here,” Boehner said.
The plan would also bar the U.S. Department of Treasury from using "extraordinary measures" to boost borrowing after the November 22 deadline.
A resolution related to the plan would appoint Republican House members to a conference committee to discuss the budget with the Senate, which they have previously refused to do 18 times since April.
The Obama administration continued to stress that Pres. Barack Obama, while "willing to look at any proposal" that Congress puts on the table, will not "pay a ransom"; adding that the president wants the debt ceiling to be raised and the government reopened before any long-term budget talks can begin.
“It is better for economic certainty for Congress to take the threat of default off the table for as long as possible, which is why we support the Senate Democrats’ efforts to raise the debt limit for a year with no extraneous political strings attached,” said a White House official.
“We will not allow a faction of the Republicans in the House to hold the economy hostage to its extraneous and extreme political demands,” the official continued.
The proposal garnered grumblings from both moderate Republicans, who want to see the government reopened, and conservatives, who view it as a form of surrender, according to The Hill.
“There is some disagreement in there. My sense is that they will [support it],” U.S. Rep. John Campbell (R-CA,45) told The Hill.
On the other side of the aisle, Majority Leader Harry Reid (D-NV) is looking to hold a procedural vote in the chamber this Saturday to raise the debt ceiling by $1 trillion, carrying it through the end of 2014. It is unclear, however, if he has the 60 votes needed to pass the resolution.
Earlier today, Treasury Secretary Jack Lew warned the Senate Finance Committee that the nation could fall back into a recession if the debt ceiling is not raised by the October 17 deadline. He also stressed the need for the government to reopen.
"Among the risks that we control, the biggest threat to sustained growth in our economy is the recurrence of manufactured crises in Washington and self-inflicted wounds. Unfortunately, we now face a manufactured political crisis that is beginning to deliver an unnecessary blow to our economy – right at a time when the U.S. economy and the American people have painstakingly fought back from the worst recession since the Great Depression," reads Lew's prepared testimony.
"Private-sector economists have estimated that a two-week government shutdown could directly reduce real GDP growth in the fourth quarter by about a quarter percentage point at an annual rate," his comments continued." Some have warned that a longer shutdown would reduce economic growth as much as 1½ percentage points. These estimates typically do not include the additional spillovers that seem likely: household and business confidence in the government could fall sharply, and other spending that relies on a functioning federal government could be postponed or cancelled. Why would anyone want to do that to our economy?"
Meanwhile, Republican senators are not falling in line with the proposal laid out by their counterparts in the House Instead, GOP senators are proposing a plan that would fund the government for a year at the 2011 level of $967 billion and extend the debt ceiling for as many as six months.
U.S. Sen. Lamar Alexander (R-TN) said GOPers were "working on our own plan", saying that he believes their proposal "will be better" because it is not enough to just raise the debt ceiling and maintain the government shutdown.
“We need to do both. The country is disgusted with the government being shut down and so am I. I'm not in the 'shut down the government' crowd, I’m in the 'takeover the government' crowd and this is helping,” he told The Hill.
The Senate proposal would also call for a repeal of the medical device tax in the Affordable Care Act and mandate income verfication for those looking to apply for subsidies when applying for coverage via the health care reform law.
UPDATE 1 (5:42 p.m.): After meeting at the White House for an hour and a half with Boehner and 19 other House Republicans, Obama rejected the plan to raise the debt ceiling for six weeks, while keeping the government closed until a long-term budget deal is hashed out. Nonetheless, both sides saw the meeting as a first step towards a compromise on the nation's finances. Talks are set to continue through the night, said House Majority Leader Eric Cantor (R-VA,7).
"The takeaway from the meeting is our teams are going to be talking further tonight. We'll have more discussion," Cantor said, according to The Hill. "We'll come back to have more discussion and the president said he would go and talk with the administration folks and hopefully we can see a way forward after that."
Image: AP Photo/J. Scott Applewhite