Senate Reaches Bipartisan Fiscal Deal

By JONATHAN WEISMAN and JENNIFER STEINHAUER

Published: October 16, 2013

Senate Republicans have gathered for a final review, but lawmakers have given no indication they will block it. A government shutdown into its third week yielded virtually no concessions to the Republicans other than some minor tightening of income verifications for people obtaining subsidized insurance premiums under the new health care law.

Under the agreement, the government would be funded through Jan. 15, and the debt ceiling will be extended to Feb. 7. The Senate will take up a separate motion to instruct House and Senate negotiators to reach accord by Dec. 13 on a long-term blueprint for tax-and-spending policies over the next decade.

Chastened Senate Republicans said they hoped the outcome would be a learning experience for lawmakers in the House and Senate who shut down the government in hopes of gutting President Obama’s signature domestic achievement, the Affordable Care Act. Instead of using the twin deadlines of an end to government funding and borrowing authority to address the drivers of the federal deficit, conservatives focused on a law they could never undo as long as Barack Obama is president, several senators said.

“We took some bread crumbs and left an entire meal on the table,” said Senator Lindsey Graham, Republican of South Carolina. “This has been a really bad two weeks for the Republican Party.”

Senator Richard Burr, Republican of North Carolina, took a swipe at Senators Ted Cruz, Republican of Texas, and Mike Lee, Republican of Utah, as well as House members who linked further funding of the government to gutting the health care law, which is funded by its own designated revenues and spending cuts.

“Let’s just say sometimes learning what can’t be accomplished is an important long term thing, and hopefully for some of the members they’ve learned it’s impossible to defund mandatory programs by shutting down the fed government,” Mr. Burr said.

A Democratic leader said the current plan was for the Senate to provide the legislative language to the House, get a House vote, and then have the Senate take up the bill, pass it, and perhaps send it to President Obama before the end of the day.

But House Republican leaders continued to ponder whether taking up a measure first was in the best interest of their members, even as they acknowledged that it would expedite and end what has been a less-than-pleasurable legislative experience for their party.

It was not clear Wednesday morning whether the leaders would try to meet with their entire conference before going to the floor, or simply move to voting later this afternoon, perhaps intuiting that a members’ meeting would be both raucous and unproductive.

House Democrats remained confused and angry. On a scale of 1 to 10, “this is a 12,” in terms of ridiculousness, said Jackie Speier, Democrat of California. “This is like a preschool that’s gone array. I’ve been in public office for 30 years, and I’ve never seen anything like it.”

Whether it can pass ahead of Thursday’s deadline for a possible default on government obligations will depend on those senators who have sought to link further financing of the government to defunding the health care law. Senators from both parties were leaning on Mr. Cruz and Mr. Lee to agree to fast-track the deal to a final vote.

The timing is crucial, because on Thursday, the government is left with only its cash on hand to pay the nation’s bills.

“It’s very, very serious,” Senator John McCain, Republican of Arizona, warned on Tuesday. “Republicans have to understand we have lost this battle, as I predicted weeks ago, that we would not be able to win because we were demanding something that was not achievable.”

Tuesday was supposed to bring Washington to the edge of resolving the fiscal showdown, but instead there was chaos and retrenching. And a bitter fight that had begun over stripping money from the president’s signature health care law had essentially descended in the House into one over whether lawmakers and their staff members would pay the full cost of their health insurance premiums, unlike most workers at American companies, and how to restrict the administration from using flexibility to extend the debt limit beyond a fixed deadline.

Even so, the House speaker, John A. Boehner, Republican of Ohio, and his leadership team failed in repeated, daylong attempts to bring their troops behind any bill that would reopen the government and extend the Treasury’s debt limit on terms significantly reduced from their original push against financing for the health care law. The House’s hard-core conservatives and some more pragmatic Republicans were nearing open revolt, and the leadership was forced twice to back away from proposals it had floated, the second time sending lawmakers home for the night to await a decision on how to proceed Wednesday.

“We’re trying to find a way through it,” said Representative Greg Walden of Oregon, the chairman of the National Republican Congressional Committee, emerging from Mr. Boehner’s office to announce that no votes would be held Tuesday night.

The House setback returned the focus to the Senate, where the leadership had suspended talks after the Senate Republican leadership opted to give the House a chance to produce an alternative to the Senate measure taking shape.

Given the progress that had been made in the Senate, Congressional Democrats and officials at the White House criticized Mr. Boehner’s move on Tuesday as an attempt to sabotage the bipartisan Senate talks even as they seemed to be nearing an agreement.

Initially, Mr. Boehner proposed a bill to reopen the government until Jan. 15, extend the debt ceiling until Feb. 7, delay a tax on medical devices two years and deny members of Congress, the president, the vice president and White House political appointees taxpayer subsidies to help buy insurance on President Obama’s health insurance exchanges.

“We’re trying to find a way forward in a bipartisan way that would continue to provide fairness to the American people under Obamacare,” Mr. Boehner said as he acknowledged “there are a lot of opinions” among his rambunctious members.

By Tuesday afternoon, House Republican leaders were back with a new proposal to finance the government through Dec. 15, extend the debt ceiling into February and deprive not only lawmakers but all their staff members of employer assistance to buy their health care. By extending that provision to staff members, Republican leaders hoped to appeal to the party’s far-right flank, but the proposal angered more moderate Republicans and was not enough for the conservative hard core.

Complicating the speaker’s task, Heritage Action, the conservative Heritage Foundation’s political arm, which wields great influence with the most conservative elements of the Republican Party, opposed the plan.

“I think there’s always hope there can be a final package I can vote on, but this is not the one,” said Representative Ted Yoho, Republican of Florida, as he and two other Tea Party conservatives left the speaker’s office.

Republican leaders had initially hoped the loss of members like Mr. Yoho could be made up with support from Democrats. But Democratic leaders made it clear they would offer no assistance. Democrats latched on to a provision in the House proposals that would have forbidden the Treasury to juggle government accounts — so-called extraordinary measures — to meet obligations beyond a debt-ceiling deadline.

In the midst of the turmoil, the credit rating agency Fitch put the United States on a “negative ratings watch,” warning that Congressional intransigence had put the full faith and credit of the government at risk.

The news came as the Treasury Department said it had only about $35 billion in cash on hand. It expects to run out of “extraordinary measures” to keep on paying all of the government’s bills on Thursday, at which point outgoing payments might exceed that cash, plus any revenue, on any day going forward.

As the United States nears default, investors have demanded more compensation for lending to the government, with yields on short-term debt spiking to their highest levels in years.

Fitch warned that Congress has not “raised the federal debt ceiling in a timely manner.” It said that it “continues to believe that the debt ceiling will be raised soon,” but that “political brinkmanship and reduced financing flexibility could increase the risk of a U.S. default.”