Republicans Offer 6-Week Debt Extension, White House Says Likely OK
U.S. House of Representatives Speaker John Boehner said Republicans would vote to extend the government's ability to borrow money for six weeks, averting a default for now — but only if President Barack Obama first agrees to fresh negotiations on spending cuts. Under the Republican plan, the separate partial government shutdown would continue.
White House spokesman Jay Carney said Obama "would likely sign" a bill with no conditions attached increasing the debt cap. He said the president also wants Republicans to reopen the government. But he did not rule out Obama agreeing to the debt ceiling proposal if the government remains closed.
Boehner produced the proposal as the partial shutdown entered its 10th day. Separately and more ominously, the administration has warned that unless the federal debt ceiling is raised, the government will deplete its ability to borrow money by next Thursday, an event officials have warned could trigger an unprecedented U.S. financial default that could wound the world economy as well as America's.
"I would hope the president would 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," Boehner told reporters after presenting the plan to rank-and-file Republican lawmakers.
Carney said the White House has yet to see a specific proposal from House Republicans. Boehner and other members of his caucus are scheduled to meet with the president at the White House Thursday afternoon.
Passing temporary funding bills to keep the government running and upping its debt limit so it can pay its bills in full and on time are normally routine matters in Congress. But they've become entangled in Republican demands for cuts in government programs, including Obama's 2010 health care overhaul law, and a bigger effort to cut long-term federal deficits.
After weeks of decline, financial market indexes shot higher in anticipation of a possible deal that could avert a default. Both the Dow Jones industrial average and Standard & Poor's 500 index were up more than 1 percent in midday trading.
Obama has steadfastly insisted that Congress reopen the government and extend the debt limit without conditions. His acceptance of the Republican proposal could mean a brief resolution to the fight over the debt limit and a continuation of the shutdown while negotiations proceed.
Republican Congressman Vern Buchanan said the plan was for the House to approve the legislation Boehner described on Friday.
International Monetary Fund chief Christine Lagarde warned a news conference on Thursday that U.S. failure to raise its debt ceiling because of a political impasse would do serious damage to both the American and global economies.
Some Republicans have downplayed the harm a default would cause and some conservatives still expressed reservations about Boehner's plan.
"I'm not very enthusiastic about that," Republican Rep. Steve King.
Under Boehner's offer, the House would also appoint negotiators to bargain with the Democratic-led Senate over a larger budget compromise. Those talks have been on hold for months, and the two chambers have deep differences over taxes and cuts in benefit programs.
Obama has repeatedly noted recent improvement in budget deficit figures. After four years of trillion-dollar deficits, the 2013 shortfall is expected to register below $700 billion.
Earlier Thursday, Treasury Secretary Jacob Lew warned the Senate Finance Committee that failure to renew the government's ability to borrow money "could be deeply damaging" to financial markets and threaten Americans' jobs and savings. It would also leave the government unsure of when it could make payments ranging from food aid to reimbursements to doctors, he said.
"The United States should not be put in a position of making such perilous choices for our economy and our citizens," the secretary said. "There is no way of knowing the irrevocable damage such an approach would have on our economy and financial markets."
Washington deadlock over increasing the debt limit already has sent the stock market south, spiked the interest rate for one-month Treasury bills and prompted Fidelity Investments, the largest U.S. manager of money market mutual funds, to sell federal debt that comes due around the time the nation could hit its borrowing limit.
At the Finance committee hearing, Lew confronted Republicans who said the bigger problem was the soaring costs of benefit programs like Social Security pensions and Medicare health care entitlements and the long-term budget deficits the country faces. Many expressed doubt about Lew's description of the consequences of default.
The senior Republican on the panel, Sen. Orrin Hatch, accused the Obama administration of "an apparent effort to whip up uncertainty in the markets."
The frustrating standoff in Washington is weighing down each side's poll numbers, but Republicans are taking the worst drubbing. A Gallup poll put the approval rating for the Republican Party at a record-low 28 percent. Polls have consistently said the Republicans deserve the greater share of blame for the shutdown.
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