By Richard Cowan
Republicans in the House of Representatives on Thursday unveiled a plan that would avert a looming U.S. default, in a sign that lawmakers may end a standoff that has rattled financial markets and thrown America’s future creditworthiness into question.
Ahead of a meeting with President Barack Obama, it was unclear whether Republicans would be willing to end a government shutdown that took effect on October 1 without concessions that would undermine Obama’s signature healthcare law, a stance that precipitated the crisis.
Still, the offer to raise the debt ceiling is a significant shift for Republicans, who had hoped to extract concessions on spending and health care. By extending the government’s borrowing authority through December, it would eliminate the near-term threat of a default that would hit everyone from retirees to bondholders.
“It’s time for these negotiations and this conversation to begin,” House Speaker John Boehner told reporters after presenting the plan to his fellow Republicans.
Obama has already said he is willing to consider a short-term debt ceiling increase as long as it is not tied to other concessions. Obama will take a look at the proposal, a White House official said. But the White House insisted that Republicans also must agree to end a government shutdown that took effect on October 1.
Many rank-and-file Republicans also appeared to be sceptical of the deal when Boehner presented it at a closed-door meeting on Thursday morning, aides said. Boehner’s grip over his troops has been tenuous this year and many of the chamber’s most conservative lawmakers have defied him repeatedly on other crucial votes.
Still, investors seemed to be heartened by the development. U.S. stocks rallied strongly with major indexes climbing more than 1 percent.
The Treasury Department says it will be unable to pay all of its bills if Congress does not raise the $16.7 trillion debt ceiling by October 17. Republicans say the Obama administration would be able to keep up with its bond payments at the expense of other obligations if that deadline was missed. Treasury Secretary Jack Lew said that’s not possible.
“It would be chaos,” he told the Senate Finance Committee.
The Republican plan would postpone that day of reckoning by six weeks, which would give them more time to seek spending cuts, a repeal of a medical-device tax, or other measures they say are needed to keep the national debt at a manageable level.
Democrats have called for a debt-ceiling hike that would extend government borrowing authority for more than a year.
The House could vote on the measures as early as Thursday afternoon, though timing remained unclear. House leaders cancelled a planned recess and said they would remain in Washington next week to keep working on the problem.
With the October 17 deadline a week away, Obama is scheduled to meet with House Republican leaders on Thursday afternoon. He is also due to meet separately with Senate Democrats and Senate Republicans.
The plan would do nothing to resolve Republican objections to Obama’s healthcare reform bill, known as the Affordable Care Act, which prompted the October 1 shutdown.
Hundreds of thousands of federal employees have been out of work since then and individual businesses, from arms makers to motels, have begun to lay off workers as well.
The Labor Department said on Thursday that 15,000 private-sector workers have filed for unemployment benefits due to the shutdown.
House Republicans have passed bills that would reopen portions of the government and otherwise ease the pain of the shutdown, but they still hope to tie a full restoration of government funding to conditions that would undercut “Obamacare,” as it is popularly known.