Talks begin over fiscal logjam

Obama, Congress exchange proposals

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WASHINGTON -- President Barack Obama opened talks Thursday with House Republicans about their plan to lift the federal debt limit through Thanksgiving, raising hopes that Washington would avert its first default on the national debt.

But after a 90-minute White House meeting, the two sides remained at odds over how and when to end the government shutdown -- now in its 11th day -- with Mr. Obama insisting that Republicans reopen federal agencies before negotiations over broader budget issues can begin.

In the Senate, top Republicans began crafting a proposal that would reopen the government and raise the federal debt limit for as long as three months, an approach closer to Mr. Obama's terms to end the standoff.

The developments meant that bipartisan negotiations were suddenly underway on two separate tracks Thursday after weeks of stalemate. But major questions remain about the path ahead.

Both sides described Mr. Obama's evening session with House Republicans 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.

House Speaker John Boehner, R-Ohio, left the session and returned to the Capitol without comment. House 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. A Democrat familiar with the meeting said Mr. Obama told the speaker to come back with 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 -- Mr. Boehner declined the offer to bring all 232 GOP lawmakers to the White House -- gathered in the Roosevelt Room with Mr. Obama, Vice President Joe Biden, Treasury Secretary Jacob Lew and other senior officials.

A similar huddle is slated for late this morning, when Mr. Obama will host Senate Minority Leader Mitch McConnell, R-Ky., and the Senate Republican Conference. Mr. McConnell and Mr. Biden have been largely on the sidelines the past few weeks, despite having served as the closers for the past three large fiscal compromises.

With the nation set to run out of money to pay its bills next Thursday, 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, recovering most of the value it had lost since the shutdown began Oct. 1. The Nasdaq and Standard & Poor's 500 Index also rose more than 2 percent.

The House proposal that emerged Thursday would push off the default threat until Nov. 22, but it would not end the shutdown -- an idea that fell flat in the Senate with both parties' members. For the first time since the brinkmanship began in early September, Mr. McConnell waded in, holding meetings with his rank-and-file members to develop a competing Senate proposal.

The package was being assembled by Sen. Susan Collins, R-Maine, who said she is also in talks with Senate Democrats. "I was surprised that the House decided to deal only with the debt limit and not with the continued closure of government. I think that we have to deal with both issues, and we need to do so quickly," she said.

Senate Democrats were intrigued by Ms. Collins' proposal but unhappy with its demand for Democratic concessions. Those would include repeal of a tax on medical devices that helps fund Mr. 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, Ms. Collins' proposal would maintain deep cuts, called sequestration, through at least March, but 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.

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 be replaced if an accord with Republicans emerged.

Even if such a deal 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, which critics deride as "Obamacare."

Mr. Boehner's offer to temporarily lift the debt limit but keep the government shuttered was meant in part to satisfy far-right conservatives, who first suggested using the shutdown threat to strip the law's funding. On Thursday, many creators of the strategy -- including Sens. Ted Cruz, R-Texas, and Mike Lee, R-Utah -- backed the speaker's latest gambit. "It's to continue [the] fight on Obamacare, to not leave that as a side issue," said Rep. Raul Labrador, R-Idaho.

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 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.


First Published October 10, 2013 8:00 PM


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