Idea to raise debt ceiling gets new look

Specilaist Fabian Caceres works  on the floor of the New York Stock Exchange Monday, Oct. 7, 2013. The stock market is opening sharply lower as the U.S. government heads into a second week of a partial shutdown with no signs of a budget agreement in sight. (AP Photo/Richard Drew)

Specilaist Fabian Caceres works on the floor of the New York Stock Exchange Monday, Oct. 7, 2013. The stock market is opening sharply lower as the U.S. government heads into a second week of a partial shutdown with no signs of a budget agreement in sight. (AP Photo/Richard Drew)

Tuesday, October 8, 2013

WASHINGTON - President Barack Obama on Monday reiterated that he won’t negotiate with Republicans over the partial government shutdown and the U.S. debt limit as Senate Democrats began preparing for a test vote on a clean debt-ceiling bill.

Many U.S. government services have been closed for a week, and the country is 10 days away from running out of borrowing authority. Republicans are insisting on changing the 2010 Patient Protection and Affordable Care Act, while Obama refuses to engage in discussions about policy conditions tied to reopening the government or raising the debt limit.

“We’re not going to negotiate under the threat of economic catastrophe,” Obama said during a visit to the Federal Emergency Management Agency in Washington.

Senate Democrats are considering a strategy that would allow Obama to raise the debt ceiling without requiring any Republican to vote in favor of a debt-limit increase, said Sen. Richard Durbin of Illinois, the second-ranking Democrat. A test vote on the proposal could occur as soon as Friday as the debates over the government shutdown and the debt limit have merged.

“Washington remains paralyzed in a staring contest with neither side appearing to blink anytime soon, and it seems highly likely that the federal government will stay closed through the week,” said Chris Krueger, a Washington analyst for Guggenheim Securities.

The method of giving Obama the authority to raise the debt ceiling barring congressional disapproval was first proposed by Senate Minority Leader Mitch McConnell, R-Ky., in 2011.

The new proposal could allow Obama to increase the nation’s debt limit unless Congress objected by a two-thirds vote in each chamber.

A one-year increase, pushing the issue past the 2014 election, likely will be in the Senate plan, Durbin said. Gene Sperling, director of the president’s National Economic Council, said that while the administration prefers a long-term boost in the debt limit, it wouldn’t rule out a temporary one.

“I’d be more in favor of long term because what does short term buy us?” Durbin said. “It buys us Thanksgiving in Washington.”

If it works, the Senate Democrats’ idea could provide a path out of the debt-ceiling standoff by giving both parties what they want. Obama would get an increase in the nation’s $16.7 trillion debt ceiling without negotiating with Republicans, and Republicans could say they objected to Obama’s attempts to increase the borrowing limit.

SOME REPUBLICANS MUST AGREE

For the Democrats’ plan to work, at least some Republicans would have to agree. Giving Obama the authority would require at least six Senate Republicans’ support on procedural votes. Durbin said Democrats haven’t started talking to Republicans yet about their proposal.

“We hope they understand the economic crisis we would be avoiding if we can pass it,” Durbin said. “We haven’t quite reached the point yet where we have any commitments.”

Under Senate rules, opponents of the Democrats’ proposal could delay a final vote until late on Oct. 15, giving the House less than two days to act before borrowing authority lapses.

Obama press secretary Jay Carney said the White House still wants the debt ceiling raised for at least a year to “remove uncertainty” for financial markets while not “ruling out a specific duration.”

“The longer you raise the debt ceiling,” the better it would be, Carney said Monday.

In the House, Speaker John Boehner would have to allow a vote on the plan and at least 16 Republicans would have to support it.

After Obama gets the authority, Congress could have votes to disapprove the increase, Republicans could vote no and the increase would still happen.

After McConnell proposed the idea in 2011, it became part of the Budget Control Act passed in August of that year. That’s the process Obama then used to raise the debt limit. For example, the House voted to disapprove of his action Jan. 18, 2012, in a 239-176 vote that failed because it lacked the two-thirds majority.

“We are not going to pass a clean debt limit,” Boehner, R-Ohio, said Sunday in an interview on ABC’s This Week program. “The votes are not in the House to pass a clean debt limit.”

Obama said the House and interest, sometime between Oct. 22 and Oct. 31, according to the Congressional Budget Office.

Unlike past fiscal feuds, this dispute is more about Obama’s Affordable Care Act, his signature health-care law, and less about the amount of spending. The U.S. budget deficit in June was 4.3 percent of gross domestic product, down from 10.1 percent in February 2010 and the narrowest since November 2008, when Obama was elected to his first term, according to data compiled by Bloomberg from the Treasury Department and the Bureau of Economic Analysis.

Boehner said Obama needs to start a conversation about the drivers of the country’s debt - entitlement programs such as Medicare and Social Security - before he could pass a measure increasing the debt ceiling.

“Really, Mr. President. It’s time to have that conversation before our economy is put further at risk,” Boehner said in remarks on the House floor.

In divided government, “Negotiation isn’t a luxury,” McConnell said Monday. “It’s a necessity.”

Boehner has been holding regular closed-door meetings with his members, asking them to stick together as they close in on the debt-ceiling deadline.The House has passed smaller funding bills for specific parts of the government, including legislation Monday to reopen the Food and Drug Administration that was approved 235 to 162, but the White House and Senate have rejected that piecemeal approach, demanding that the entire government be funded.

Earlier House-passed bills would end the shutdown at national parks, the National Guard and Reserves and the Women, Infants and Children nutrition program, and ease effects for the Washington, D.C., government, among other locations. Each of the measures cleared the House with some Democratic support.

Yet each is under a veto threat by the White House, and Senate Majority Leader Harry Reid opposes them in the Senate as far less than the full restoration of government services that most Democrats favor.

WORKERS STILL IDLE

Still, the shutdown eased over the weekend, when about 350,000 civilian defense workers were recalled as a result of legislation Congress passed and Obama signed after the shutdown began, including most of the furloughed workers at the military academies.

That left an estimated 450,000 federal employees idle at agencies responsible for domestic programs, ranging from the Departments of Education to Energy, and including Labor, Health and Human Services, Interior, Transportation and more. Also, not all of the academies benefited. Because it falls under the Department of Homeland Security, the Coast Guard Academy in New London, Conn., was not affected by last weekend’s legislation.

House Republicans have rebuffed calls from Democrats to put a “clean” bill on the floor to fund the government at the level it was before the partial shutdown.

Last month, Boehner, 63, outlined a debt-limit increase strategy that also included lighter regulations, cuts in entitlement programs and approval of TransCanada Corp.’s Keystone XL pipeline.

The outline included means-testing Medicare, reducing the changes to malpractice law and eliminating social services block grants. Also being considered was a proposal to eliminate a requirement that gives regulators authority to seize and dismantle financial firms if their failure could damage the stability of the U.S. financial system.

Rep. Paul Ryan, R-Wisconsin, his party’s 2012 vice presidential candidate, has been pressing for a plan that would resolve the government spending impasse and raise the debt-limit at the same time while implementing economic growth policies and extracting deeper entitlement cuts as some in the Republican conference complained the leaders’ initial outline didn’t go far enough.

CHINA URGES RAISING DEBT

Also on Monday, China stressed the importance for the international economy of raising the U.S. debt limit.

“Safeguarding the debt is of vital importance to the economy of the U.S. and the world,” Vice Finance Minister Zhu Guangyao said, according to the official Xinhua News Agency. China holds $1.277 trillion in U.S. Treasury bonds, second only to Japan.

Guangyao called for “concrete measures” to raise the debt ceiling before the deadline and to protect the safety of Chinese investments.

“This is the United States’ responsibility,” he said.

Meanwhile, the Justice Department says that because of the shutdown, it wants a federal court to delay a court case in which the government has said it will reveal more secret documents about the National Security Agency’s surveillance program.

In a new filing with the Foreign Intelligence Surveillance Court, the government says that without an appropriation from Congress, Justice Department attorneys and employees are prohibited from working, except in emergencies involving the safety of human life or the protection of property.

The government is seeking a delay in a case involving Yahoo Inc. being required to turn over customer data to the NSA.

Yahoo was among several U.S. Internet businesses identified as giving the NSA access to customer data under the PRISM information-gathering program.

Information for this article was contributed by Richard Rubin, Kathleen Hunter, Margaret Talev Kasia Klimasinska, Roxana Tiron, Sara Forden, Julianna Goldman, Michael C. Bender, Phil Mattingly and Mike Dorning, Pratish Narayanan, Stephen Kirkland, Daniel Kruger and Susanne Walker of Bloomberg News; by Jackie Calmes of The New York Times; by David Espo, Martin Crutsinger, Jim Kuhnhenn, Donna Cassata and Alan Fram of The Associated Press.

Front Section, Pages 1 on 10/08/2013