House Scraps Vote on Debt Ceiling

The House scrapped a vote Tuesday night on a fiscal plan that contains almost none of Republicans’ initial conditions for ending the 15-day-old government shutdown and raising the debt ceiling, said Rep. Pete Sessions, chairman of the House Rules Committee.

House Speaker John Boehner was making a last-minute bid to influence the outcome of the showdown before the nation’s borrowing authority lapses Thursday.

As Republican leaders tried to gather member support for their latest idea, the Rules Committee put off a late-afternoon meeting, the first step before the legislation heads to the floor.

"We’re going to be prepared tomorrow to make some decisions," Sessions said in the Capitol.

Unlike previous stopgap spending legislation, the House bill wouldn’t make major changes in the 2010 healthcare law known as Obamacare, and it contains none of the cuts to entitlement programs many Republicans were seeking before they would agree to a debt-limit increase.

House Republicans have a 232-200 majority, and they would need all but about 15 GOP members to support a plan. Democratic Leader Nancy Pelosi of California said the proposal is a path to default and urged Boehner to support an emerging bipartisan agreement in the Senate.

"We’re at the 11th hour here," said Sen. Charles Schumer, a New York Democrat. "The train to avoid default was smoothly heading down the tracks and picking up speed, and all of a sudden, at the last minute, Speaker Boehner decides to throw a log on those tracks. Enough already."

Ratings Watch

The House Republican plan emerged as Fitch Ratings put the United States' AAA credit grade on "ratings watch negative," citing the government’s inability to raise the debt ceiling in a timely manner, according to a statement after New York markets closed.

The bill would keep the government open through Dec. 15 and suspend the debt limit until Feb. 7. It would prevent the government from making any contribution toward the health insurance of members of Congress and their staffs, the president, the vice president and high-ranking administration officials.

In contrast, the emerging Senate agreement would keep the government open through Jan. 15 and suspend the debt limit through Feb. 7. The Treasury Department would be able to use "extraordinary measures" to extend that deadline for three to four weeks, said a Senate Democratic aide who spoke on condition of anonymity to discuss the private talks.

It contains no major changes in the health law. The Senate agreement also would give federal agencies flexibility to manage across-the-board spending cuts known as sequestration if they occur in 2014.

Stocks Fall

Senators hadn’t reached agreement on some issues, including whether Treasury would get flexibility beyond Feb. 7 to pay bills.

U.S. stocks dropped after Senate leaders suspended their talks. The Standard & Poor’s 500 Index fell 0.7 percent to 1,698.06, and the Dow Jones Industrial Average declined 0.9 percent to 15,168.01 at 4 p.m. in New York.

Benchmark Treasury 10-year yields rose 4 basis points, or 0.04 percentage point, to 2.73 percent at 5 p.m. EDT, according to Bloomberg Bond Trader prices. The rate touched 2.74 percent, the highest since Sept. 23. The rate on bills due Oct. 24 rose 20 basis points to 0.46 percent after touching 0.51 percent, the highest since the bills were sold. The rate was negative as recently as Sept. 27.

Senate Majority Leader Harry Reid and Minority Leader Mitch McConnell put their talks on hold Tuesday while they awaited House action.

'Absolutely Shocked'

Democrats were furious with Boehner during their private caucus meeting, said Sen. Chris Murphy, a Connecticut Democrat.

"I don’t think I've seen that room as mad as it was today all year," Murphy said. "People are absolutely shocked that John Boehner would singlehandedly kill the momentum that had developed all day long yesterday."

If the House bill passes and Senate Republicans try to delay it, the Senate could still amend it and send it back to the House by about 7 a.m. EDT Friday, said a Senate Democratic aide who spoke on condition of anonymity to discuss potential strategy.

If the House bill fails, the Senate could move its own legislation. That would create more procedural obstacles and could delay Senate passage into late next week if even a single senator objects, the aide said. Then that bill would have to go to the House.

Delay Tactics

Texas Republican Sen. Ted Cruz, who spoke for more than 21 hours during a budget debate last month, wouldn’t rule out stalling maneuvers, saying he wants to see the details of the plan.

President Barack Obama has insisted that Congress raise the $16.7 trillion U.S. debt limit without add-ons and that stopgap spending bills be free of policy conditions. The White House has encouraged the Senate negotiations and rejected the House approach.

Unless Congress acts, the United States will be operating only on cash and incoming revenue starting Thursday. It will begin missing promised payments between Oct. 22 and Oct. 31, the Congressional Budget Office says.

Graham, Boehner

Sen. Lindsey Graham, a South Carolina Republican who is close to Boehner and spoke to him by telephone earlier Tuesday, said he's concerned that the speaker could become a "victim" of a failed Republican strategy to use a government shutdown as leverage to try to force changes in the healthcare law.

Graham also said he is "getting to the point of disgust" with Democrats, including Reid, for refusing to help Republicans devise a way to extricate themselves from an impossible negotiating position.

"Instead of trying to help us find a way out of a bad spot — we won’t be the last political party to overplay our hand, it may happen one day on the Democratic watch," he said. "And if it did, would Republicans, for the good of the country, kind of give a little?" Graham asked, adding that Republicans went "too far" and "screwed up."

The House plan falls far short of Republican efforts last month to defund or delay major parts of the 2010 health insurance law.

Boehner told Republicans the approach was the chamber's only possible strategy to respond to the emerging Senate deal that he described as a hand grenade being lobbed at the House, said Rep. John Fleming, a Louisiana Republican.

'Bipartisan Path'

Pelosi said there's a 'bipartisan path' to preventing the lapse in borrowing authority. She urged Boehner to allow a vote on the Senate deal.

"Perhaps the speaker just needs to humor his troops so they can sow their oats," the California Democrat said Tuesday on Bloomberg Television. "They’ve hijacked the Republican name. Republicans are not for jeopardizing our full faith and credit."

The partial government shutdown began Oct. 1 after Republicans insisted on changes in the 2010 Patient Protection and Affordable Care Act, known as Obamacare.

Backed by Cruz, they started with a plan to defund the law and ended up seeking a one-year delay of the requirement for individuals to purchase health insurance.