On The Edge Of Default
WASHINGTON (AP) – Time growing desperately short, House Republican efforts to pass legislation averting a Treasury default and ending a partial government shutdown collapsed Tuesday night, and one of the country’s top ratings firms warned of a possible downgrade in the nation’s creditworthiness.
The decision by Speaker John Boehner and the GOP leadership to pull a bill they had unveiled earlier in the day appeared to mark the end of what amounted to a daylong detour from separate negotiations in the Democrat-controlled Senate.
There was no immediate reaction from either Senate Majority Leader Harry Reid or Minority Leader Mitch McConnell, on next steps as divided government sought to extricate itself from yet another crisis.
According to Treasury Secretary Jacob Lew, unless Congress acts by Thursday, the government will lose its ability to borrow, and would be required to meet its obligations relying only on cash on hand and incoming tax receipts.
As the day of secret meetings and frenzied maneuvering unfolded in all corners of the Capitol, Sen. Barbara Mikulski, D-Md., stood on the Senate floor at midafternoon and declared, “We are 33 hours away from becoming a deadbeat nation, not paying its bills to its own people and other creditors.”
In New York, the Fitch rating agency warned that it was reviewing the government’s AAA credit rating for a possible downgrade, though no action was near. Fitch, one of the three leading U.S. credit-ratings agencies, said that “the political brinkmanship and reduced financing flexibility could increase the risk of a U.S. default.”
Under the revised bill prepared by House Republicans, the Treasury would be permitted to borrow normally until Feb. 7 and the government reopened with sufficient funds to carry it to Dec. 15.
Additionally, members of Congress, the president, vice president and thousands of aides would no longer be eligible to receive employer health care contributions from the government that employs them.
Before the bill seemed to lose steam later in the day, Michael Steel, a spokesman for Speaker John Boehner said the legislation would “end Obamacare subsidies for elected officials and staff in Washington, D.C., and pressure Senate Democrats to accept more sensible” time frames for reopening the government and renewing Treasury’s borrowing authority.
Gone from the measure was a pair of provisions that had drawn objections, one a plan to delay a medical device tax created under the unpopular health care law known as Obamacare.
The other would have imposed tougher income verification standards on individuals and families seeking subsidies for care under the law.
Democrats had viewed both as concessions to Republicans, and deemed their inclusion as a violation of Obama’s vow not to pay a “ransom” to the GOP for passing essential funding and borrowing measures.
Even with the changes, it was unclear whether Boehner and the GOP leadership had the votes to pass their measure.
Heritage Action, a group with close tea party ties, announced it would oppose the measure because “it will do absolutely nothing to help Americans who are negatively impacted by Obamacare.” It said it would include the vote in its determinations next year on which candidates to support in the midterm elections.
The day’s events prompted an outbreak of partisan rhetoric, mixed with urgent warnings that both the U.S. and global economies could suffer severe damage quickly unless Congress acted by Thursday.
Speaking with reporters, Boehner said, “I have made clear for months and months that the idea of default is wrong and we shouldn’t get anywhere close to it.”
But the first measure the leadership produced evidently came up short on votes, and the White House trashed it as an attempt to “appease a small group of tea party Republicans who forced the government shutdown in the first place.”
Democrats jumped on Boehner and the plan he produced.
In unusually personal remarks, Senate Majority Leader Harry Reid said the Ohio Republican had “once again tried to preserve his role at the expense of the country.”
The Democrats’ attacks were too much for some Republicans who have been among those most vocal in calling for a bipartisan solution to the impasse and the .
“It’s piling on and it’s not right,” Sen. John McCain, R-Ariz., said. “To categorically reject what the House and the speaker are doing – and I think he’s pretty courageous in what he’s doing – in my view is not serving the American people.”