GOP disarray: On-again, off-again House vote on shutdown plan

CNN

WASHINGTON (CNN) — Disarray in the Republican-led House wreaked havoc Tuesday on efforts to forge a compromise to end the partial government shutdown and avoid a possible U.S. default this week, with GOP leaders seemingly unable to come up with any plan acceptable to their members.

On a day of political drama and confusion, House Republicans first proposed their own version of a Senate plan to temporarily end the political stalemate paralyzing Congress, then haggled among themselves over the details before finally agreeing to vote on it Tuesday night.

But shortly after announcing the planned vote, the House committee that sets the rules for such procedures postponed its hearing, putting in doubt the possibility that the full chamber would consider the measure on Tuesday night.

Failure by Congress to raise the nation’s borrowing limit could trigger the first-ever U.S. default as soon as Thursday.

President Barack Obama called for House Republicans to “do what’s right” by reopening government and ensuring the United States can pay its bills, telling CNN affiliate WABC that “we don’t have a lot of time” to avoid a possible default.

If the House proposal eventually passes, it would then go to the Democratic-led Senate for consideration with pressure mounting for a final agreement before financial markets react to the possibility of a first-ever U.S. default.

One Wall Street credit rating firm, Fitch, on Tuesday warned of a possible downgrade of gold-plated U.S. bonds, citing risk of default from “political brinkmanship.”

The House proposal

According to multiple sources, the House plan will call for funding the government through December 15 to end the partial shutdown that entered its third week. It also would increase the federal debt ceiling until February 7.

In addition, the House GOP version will include a provision demanded by tea party conservatives that would prohibit federal subsidies for the President, officials in his administration, members of Congress and their respective staff in buying health insurance under Obama’s signature health care reforms.

Republicans dropped demands to include two other provisions related to Obamacare. One would have delayed a tax on medical devices proponents say is needed to help pay for the Affordable Care Act and the other would have tightened income verification of those seeking subsidies to purchase health insurance.

The House proposal also would forbid the Treasury from taking what it calls extraordinary measures to prevent the government from defaulting as cash runs low, in effect requiring hard deadlines to extend the federal debt ceiling.

Earlier, sources said House Speaker John Boehner was “struggling” to come up with enough votes to pass the GOP counter-proposal to the Senate plan.

After a two-hour caucus meeting that lasted far longer than scheduled, Boehner told reporters there was no final decision on what the GOP-led House would do.

In a possible signal that he would proceed on a plan opposed by the GOP tea party conservative wing, Boehner said “the idea of default is wrong and we shouldn’t get anywhere close to it.”

Hours later, GOP sources confirmed that the revised Republican plan would be put to a vote.

House Democrats criticized the plan as a reckless attempt to torpedo any chance at compromise.

Dems standing firm

Minority Leader Nancy Pelosi, following a meeting between Obama and House Democratic leaders, signaled her caucus still wanted “clean” proposals to fund the government and raise the debt ceiling.

“The bill that they’re talking about right now is a bill to default. It’s a decision to default. Once they get over that, then we’ll see what they send to the floor,” she said of Republicans, adding that she remained optimistic Congress would find a path to resolve the matter.

Two senior House GOP sources told CNN’s Deirdre Walsh that the House GOP counter-proposal would pass in a way that allows the Democratic-led Senate to strip provisions with a simple majority.

Walsh and CNN Chief Congressional Correspondent Dana Bash explained that would make it harder for tea party conservatives such as GOP Sen. Ted Cruz of Texas to delay or derail the agreement.

The significance of having the House go first became clear later Tuesday when sources in both parties told CNN that senators working on the agreement put their work on hold temporarily as Reid and McConnell waited to see how the House proceeds.

Senate negotiations

Senate leaders from both parties said they were closing in on a deal to temporarily fund the government through January 15 and raise the federal borrowing limit to February 7.

Economists warn that failure to raise the debt limit by Thursday could spike interest rates with possible catastrophic impact at home and abroad.

Senate Majority Leader Harry Reid and other Democrats immediately slammed the House GOP leadership for what they called a reckless brinksmanship maneuver.

“Extremist Republicans in the House of Representatives are attempting to torpedo the Senate’s bipartisan progress with a bill that can’t pass the Senate,” Reid said on the Senate floor.

He earlier said he was “confident we will be able to reach a comprehensive agreement this week,” reiterating the optimism he expressed Monday night that raised hopes among investors, world leaders and regular Americans that the shutdown stalemate was nearing an end.

The White House also rejected the Republican effort.

The halting pace of negotiations began Monday, when the White House canceled a planned meeting with congressional leaders in what was perceived as a move to Reid and his Republican counterpart, Sen. Mitch McConnell, with room to negotiate.

Sen. Bob Corker, R-Tennessee, said it was time to get a deal done after lengthy delays he blamed on the unrealistic goal set by GOP conservatives of gutting Obamacare.

“The fact is we’ve got to figure out a way to move ahead,” he told CNN’s “New Day” on Tuesday. “In fairness, on our side of the aisle, we’ve wasted two months, focused on something that was never going to happen.”

However, the House GOP decision to offer a counter-proposal promised further delay toward final congressional action on an agreement.

World watching DC

Meanwhile, Cruz had a dinner meeting on Monday night with House conservatives to discuss the the emerging Senate deal and how to react, according to a source familiar with the gathering at a Capitol Hill restaurant.

The congressional negotiations are being closely watched by other nations, which would also feel the impact should the United States run out of money to pay some of its bills.

Jon Cunliffe, who will become the deputy governor of the Bank of England, told British lawmakers over the weekend that banks should begin planning for contingencies.

The partial shutdown has proved costly. Hundreds of thousands of federal employees are either idle at home or not being paid while working.

And officials warn that tough choices are ahead about which bills to pay and which to let slide, should the shutdown and debt ceiling debate drag on.

So far, the standoff has cost the economy about $20 billion in gross domestic product, CNN’s Christine Romans reported Tuesday on “New Day,” citing Mark Zandi of Moody’s Analytics. GDP is a measure of the goods and services produced by an economy.

CNN’s Dana Bash, Jason Hanna, Greg Clary, Deirdre Walsh, Mark Preston, Dan Merica, Brianna Keilar and Janet DiGiacomo contributed to this report.