Democrats Rebuff GOP Offer to Blunt Shutdown

Tuesday, 01 Oct 2013 04:48 PM

 

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A Republican proposal to approve spending for a handful of federal agencies was swiftly criticized by Democrats, extending the impasse that forced the first partial U.S. government shutdown in 17 years.

House Republican leaders presented a plan Tuesday for stopgap spending bills through Dec. 15 for the Washington, D.C., government, the Department of Veterans Affairs and the National Park Service, said Rep. Kevin Brady of Texas.

That approach, in which Republicans allow limited exceptions to their insistence on tying government funding to limits on President Barack Obama’s Affordable Care Act, would blunt some of the political damage from the shutdown.

It may not pass the House on Monday because Republican leaders are using a procedure that would require Democratic votes.

"Bits and pieces don’t do it," said Sen. Barbara Mikulski, a Maryland Democrat. “They’re trying to do their little piecemeal to give a faux way of solving the problem.”

As Congress sought to find a way out of the impasse, the absence of high-level negotiations on spending legislation made it more likely the feud would merge with the more consequential fight later this month over how to raise the U.S. debt limit to avoid a first-ever government default.

Trading Volleys

House Republicans made their piecemeal proposal hours after the Senate rejected the latest version of a House spending bill on a party-line vote. It was the third time in less than 24 hours that the Senate rebuffed Republican spending legislation that included provisions to curtail the Affordable Care Act, also known as Obamacare.

So far, there was little external pressure to reach a deal. U.S. stocks rose, after the Standard & Poor’s 500 Index fell to a three-week low, as investors speculated the economic effects of the partial government shutdown would be limited.

The S&P 500 rose 0.8 percent to 1,695 at 4:11 p.m. in New York, after declining Monday for the seventh time in the past eight sessions. Treasury 10-year yields rose 3 basis points, or 0.03 percentage points, to 2.64 percent at 3:40 p.m. The S&P GSCI gauge of 24 commodities declined 0.5 percent as precious and industrial metals led losses, with gold futures tumbling 2.8 percent to $1,289.80 an ounce at 2:41 p.m.

‘Lemming Strategy’

House Republicans are divided between hard-liners insisting on continued confrontation and at least seven others who say they would support a spending bill to end the shutdown without health-law conditions attached.

“This is the lemming strategy,” Rep. Devin Nunes, a California Republican, said after the closed-door meeting, referring to a group of Republicans who want to stop the healthcare law and are aligned with Sen. Ted Cruz, a Texas Republican. “This is all Ted Cruz, we are following exactly to a T what they want to do.”

New York Republican Tom Reed said the latest approach outlined by his party’s leadership is for “taking this one step at a time” toward an agreement to reopen the government.

“Hopefully, this actually sets the stage for us to get to the table and talk and work out our differences,” Reed said. “We are very concerned about the veterans,” and the measure would help Republicans “see what Democrats are willing to join with us to support.”

The first shutdown in 17 years, including the furlough of almost 800,000 employees and closing of offices, parks and museums, may cost the United States at least $300 million a day in lost economic output at the start, according to IHS Inc.

Though that’s a fraction of the country’s $15.7 trillion annual economy, the effects may grow over time as consumers and businesses defer purchases and expansion plans.

Voter Disapproval

Voters disapprove of the job being done by congressional Republicans by 74 percent to 17 percent — their lowest score ever — while disapproving of Democrats’ job by 60 percent to 32 percent, according to a national poll released today by Quinnipiac University.

Obama got a 45 percent to 49 percent overall job approval rating, versus his 46 percent to 48 percent score Aug. 2, according to the survey, which has a margin of error of plus or minus 2.5 percentage points.

“Voters are angry at almost everyone in Washington over their inability to keep the trains running, but they are madder at the Republicans than the Democrats,” said Peter A. Brown, assistant director of the Hamden, Conn.-based polling institute.

Both sides jockeyed Tuesday to place blame on the other side.

Democrats said the nation was being taken hostage by the Republicans’ Tea Party faction, while the Republicans blamed Senate Democrats and Obama for being unwilling to negotiate over measure to delay or curtail the Affordable Care Act.

More Compromise

“Every piece of legislation the House sent over would have kept the government from shutting down,” Senate Minority Leader Mitch McConnell of Kentucky said after Tuesday's vote, adding that each House proposal was more of a compromise than the previous proposal.

Democrats “seem completely opposed to negotiation or compromise” on Obamacare even at the cost of a shutdown, McConnell said.

Financial markets are overconfident that the stalemate will be resolved in time to avoid major economic damage, White House economic adviser Gene Sperling said Tuesday.

“There is a false sense of complacency among some in the market that somehow things will be always solved at midnight,” Sperling, director of Obama’s National Economic Council, told Bloomberg News.

“Unless sensible people in the Republican Party are willing to take back control of their party,” he said, “there is a much more serious risk of a negative economic and financial event.”

‘Way Out’

Sen. John McCain, an Arizona Republican, said the situation wasn't as grim as it appeared.

“Believe me, there are some conversations going on,” he said. “The House Republicans are looking for a way out of this because of a reaction from the American people, but they are also trying to preserve their position, and it’s a very difficult situation for them.”

Many federal employees reporting to work Tuesday were given a few hours to complete shutdown activities, such as securing files and posting "closed" signs and phone messages, before being sent home until Congress passes a spending measure for the new fiscal year, which began Tuesday.

One government operation that will continue is the start of enrollment in the health-insurance exchanges mandated under Obama’s health-care law, which many Republicans oppose. That’s because it’s paid by mandatory funding unaffected by the lapse.

Settled Law

“It is settled, and it is here to stay,” Obama said Tuesday at the White House.

During the partial government shutdown, many essential government operations will cease.

Internal Revenue Service call centers will close, and more than 90 percent of Environmental Protection Agency workers will stay home. National parks and museums will be shuttered. The U.S. military academies suspended intercollegiate athletics, and the Bureau of Labor Statistics said it would not release the Oct. 4 unemployment report if the shutdown continued.

Other services will continue uninterrupted even if workers go unpaid. Social Security and Medicare benefits will be paid. U.S. troops will remain at their posts around the world, and will be paid under a bill Obama signed Monday. Air-traffic controllers and airport security screeners will keep working.

 

© Copyright 2014 Bloomberg News. All rights reserved.

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