Shutdown Day 10: House GOP will propose a short-term debt ceiling proposal

By Tom Cohen and Dana Bash

WASHINGTON (CNN) — House Republican leaders said Thursday they will propose a temporary increase in the nation’s borrowing limit — a first step toward a potential compromise to end the political stalemate that has shut down parts of the government and threatens a U.S. default as soon as next week.

After meeting with his caucus, House Speaker John Boehner said Republicans want substantive talks with President Barack Obama and Democrats on reducing the nation’s chronic federal deficits and debt in return for removing the immediate threat of default.

Sources said the House GOP measure would extend the debt ceiling until November 22.

However, it was unclear if it also would address the partial government shutdown that was in its 10th day.

The White House made clear that Obama wanted both a debt ceiling increase and temporary spending to reopen the government before he would hold formal talks with Republicans trying to wring concessions on deficit reduction and his signature health care reforms known as Obamacare.

“Once Republicans in Congress act to remove the threat of default and end this harmful government shutdown, the president will be willing to negotiate on a broader budget agreement,” a White House statement said.

Stocks higher on possible deal

Even a hint of a possible deal caused stocks to open sharply higher in New York, showing Wall Street’s concern over possible economic fallout from continued stalemate in Congress over ensuring the government can continue borrowing in order to pay its bills.

House Republicans were meeting Thursday morning to discuss their debt ceiling plan, and GOP leaders will travel to the White House in the afternoon for their own meeting with the president.

Senate Democrats have a separate meeting scheduled with Obama on Thursday.

At the private meeting with House Democrats on Wednesday, Obama said he would consider a short-term deal to raise the federal borrowing limit, a Democratic lawmaker told CNN.

“If that’s what Boehner needs to climb out of the tree that he’s stuck in, then that’s something we should look at,” according to the lawmaker, who attended the meeting and spoke on the condition of anonymity.

At the same time, Obama has insisted he won’t negotiate unless Republicans agree to reopen the government by passing a temporary spending plan without demands by tea party conservatives to defund or delay Obamacare — his signature health care reforms.

The legislative wrangling comes amid a stalemate that has Republicans trying to use spending and debt limit deadlines as leverage to wring concessions from Obama and Democrats.

Because of the impasse, the partial government shutdown began when Congress failed to fund the government for the new fiscal year that began Oct. 1. Another deadline looms as soon as next week, with economists warning that failure to raise the federal borrowing limit could bring a U.S. default and the possibility of another recession.

‘Measure of hope’

The Democratic legislator who spoke to CNN left the White House meeting Wednesday with a “small measure of hope” that a temporary increase in the debt ceiling can become “an exit strategy.”

Obama warned the House Democrats that if Republicans want to propose a short-term fix and Democrats say no, they would lose the high ground in the argument over which party was being reasonable.

Boehner and Republicans are demanding that Obama and Senate Democrats negotiate on deficit reduction steps that would be part of legislation to reopen the government and raise the limit on federal borrowing needed to pay the bills.

Obama has refused to enter formal talks until the shutdown ends and the debt ceiling has been raised to remove the threat of default.

A senior House Republican told CNN that GOP members may be willing to go for a short-term debt ceiling hike — lasting four to six weeks — as long as the president agrees that negotiations will occur during that time.

However, no specifics were immediately available about how such legislation would take shape or how the talks would occur.

Republican sources have also told CNN the parameters of those talks have to be specific enough to sell to their skeptical GOP members.

GOP seeks leverage

Days of back-and-forth rhetoric and jibes between the leaders have brought no direct negotiations, but plenty of accusations and political spin.

On Wednesday, GOP leaders appeared to shift their focus from efforts to dismantle Obama’s signature health care reform, the initial driving force behind the shutdown, to securing spending cuts elsewhere.

Ryan’s plan drops Obamacare

Republican Rep. Paul Ryan of Wisconsin, the House Budget Committee chairman who was the party’s vice presidential nominee last year, argued in a Wall Street Journal op-ed that Democrats and Republicans should focus on “modest reforms to entitlement programs and the tax code.”

“Right now, we need to find common ground,” he wrote in the column posted online Tuesday night. “We need to open the federal government. We need to pay our bills today — and make sure we can pay our bills tomorrow. So let’s negotiate an agreement to make modest reforms to entitlement programs and the tax code.”

However, Ryan’s column never mentioned Obamacare, focusing instead on forced spending cuts to domestic and military programs, as well as reforms to Medicare.

Ryan’s Obamacare omission appeared to anger conservatives, who took to Twitter in response.

“Much like White House press, Paul Ryan doesn’t mention Obamacare in WSJ oped,” tweeted Dan Holler, spokesman for the conservative group Heritage Action.

GOP supporters of Ryan said he was signaling the strategy to separate the debt ceiling negotiations, which would involve deficit reduction steps, from the spending plan needed to end the government shutdown.

Perhaps in response to a conservative backlash, Boehner made a brief statement Wednesday on the House floor that focused on the GOP message that Obamacare was detrimental to the country. He stopped short of linking it to any negotiations on ending the shutdown and raising the debt ceiling.

Boehner insists that the government must reduce deficits, declaring that Republicans won’t raise the debt ceiling without steps toward that goal.

But a House GOP leadership source told CNN on Wednesday that Obama’s rejection of linking negotiations to raising the borrowing limit meant that Republicans probably would be forced to agree to a “clean” debt ceiling limit proposal in exchange for setting up talks on deficit reduction steps.

According to the source, the economic implications of a U.S. default “scares people” to make such a deal acceptable to enough House Republicans in order to get negotiations started.

The source acknowledged that Boehner may lack support from some or most of his GOP caucus, requiring Democratic votes for the proposal to pass.

Democrats planning

Democratic Sen. Dick Durbin of Illinois told CNN that his side already was mulling over “what we will discuss, what we will negotiate over, what things will be on the table.”

The GOP-led House passed a measure Tuesday to set up a special negotiating team comprising members of both parties from the House and Senate, but Obama and Democrats rejected the concept as the latest Republican gimmick to force talks before raising the debt ceiling.

Meanwhile, Senate Democrats announced they will propose a measure to increase the debt ceiling beyond next year’s congressional elections with no additional issues attached.

While many Republicans are certain to oppose it, Democratic leaders hope increased pressure for Congress to prevent a default next week will cause some GOP senators to vote for it.

A GOP source told CNN on Tuesday that the White House was having corporate chief executives call Republican leaders. The business community has called for resolving the Washington stalemate to avoid a default that would spike interest rates and affect the economy.

Without a breakthrough, the shutdown would continue at a cost estimated at up to $50 billion a month. Failure to raise the debt ceiling by next week’s deadline would leave the government unable to borrow money to pay its bills for the first time in its history.

All the partisan bickering — and lack of progress — is taking its toll not just on furloughed workers, shuttered government facilities and programs, but also on Americans’ confidence in their government.

Poll: Most angry at both parties

In a national poll released Monday, most respondents said the government shutdown was causing a crisis or major problems for the country.

The CNN/ORC International survey indicated that slightly more people were angry at Republicans than Democrats or Obama for the shutdown, though both sides took a hit.

According to the poll conducted over the weekend, 63% of respondents said they were angry at Republicans for the way they have handled the shutdown, while 57% expressed anger at Democrats and 53% at Obama.

“It looks like there is more than enough blame to go around, and both parties are being hurt by the shutdown,” said CNN Polling Director Keating Holland.

According to a new Gallup poll Wednesday, the Republican Party’s favorable rating dropped to 28%, down 10 percentage points from September. The 43% for Democrats was a 4-percentage-point drop from last month.

A CNN survey indicates that enough Republicans in the House would join Democrats in voting for a Senate-passed spending plan to end the shutdown.

All 200 Democrats and 19 Republicans support passing a continuing resolution with no additional legislative strings attached.

With two vacancies in 435-member House, 217 votes are the minimum needed for the measure to win approval in the House.

However, not enough Republicans are willing to join Democrats in a procedural move to force Boehner to hold a vote on the Senate plan.

Boehner has said the measure would fail to pass in the House, a contention rejected by Obama and Democrats.

The speaker has previously allowed measures to pass the House with mostly Democratic support, which has weakened his leadership among conservatives. Doing so now could cost him his leadership post due to the conservative backlash it would probably unleash, analysts say.

CNN’s Chelsea J. Carter, Paul Steinhauser, Jim Acosta, Deirdre Walsh, Barbara Starr, Ted Barrett, Dan Merica and Brianna Keilar contributed to this report.

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