Parties Diverge in Bid to Break Fiscal Deadlock
House Republicans Urge Budget Talks; Senate Democrats Plan Debt-Limit Vote
WASHINGTON—The House and Senate headed down separate tracks Tuesday in their efforts to break the stalemate that has led to a week-old partial government shutdown.
House Republicans, stepping up calls for face-to-face negotiations, planned to pass legislation that would set a framework for wide-ranging budget talks. Senate Democrats were planning a vote this week to extend the country's borrowing authority through 2014, after next year's midterm elections.
The efforts lacked a key component for ending the budget stalemate: endorsement from the other side.
President Barack Obama dismissed the latest overtures from House Republicans earlier Tuesday. The White House said the president told House Speaker John Boehner (R., Ohio) in a morning phone call he remained willing to engage in broad talks on federal spending "after the threat of a government shutdown and default have been removed."
Mr. Obama, in remarks from the White House Tuesday afternoon, said failure to raise the U.S. borrowing limit would have catastrophic consequences for the economy.
So far, the budget standoff has taken a limited toll on financial markets, but there were signs of fresh wariness Tuesday. Short-term U.S. debt prices tumbled amid rising investor concern about the prospect of a government-debt default, sending the yield on one-month U.S. Treasury bills to their highest level since the financial crisis. Stock prices also continued to sag, with the Dow Jones Industrial Average down about a hundred points in afternoon trading.
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Top Bankers Warn on U.S. Debt Proposal Debt Limit Taking Center Stage in Impasse Government Shutdown Starts to Crimp Trade Mr. Boehner, under pressure to keep together a divided Republican caucus in the House, turned to calls for negotiations after pressing GOP priorities in numerous bills on government funding in recent weeks, both before and after the shutdown. House Republicans planned to vote on legislation later Tuesday ensuring some federal workers get paid Friday, in the Republicans' latest bid to engage Senate Democrats in broader budget talks.
"It's time for us to sit down and resolve our differences," Mr. Boehner said. "Are we going to sit down and have a conversation or aren't we?"
Senate Majority Leader Harry Reid (D., Nev.), speaking on the Senate floor Tuesday, maintained Democrats were ready to negotiate over government spending as long as Republicans first agreed to reopen the government and increase the nation's borrowing limit. "Everyone has my commitment: open the government, raise the debt ceiling and we'll talk about anything you want to talk about," Mr. Reid said.
To provide a formal vehicle for budget negotiations, House Republicans have proposed a bipartisan, congressional working group to discuss fiscal issues, including government funding and the debt limit. They planned to attach the plan to the "essential worker" pay legislation.
Some House Democrats recoiled at the prospect of budget negotiations along the lines of the so-called supercommittee formed in the 2011 debt-ceiling negotiations.
"Not again," said Rep. Xavier Becerra (D., Calif.), one of the 12 members of that group. "It was just punting." He said what emerged from that group's failure to reach a deal to reduce the deficit was the sequester, the across-the-board spending cuts that kicked in last spring. "There is no reason we can't get our work done now."
House Minority Whip Steny Hoyer (D., Md.), however, said the measure to set up a new committee was a step forward but complained it lacked balance because there was no discussion of tax revenues.
"A suggestion that we sit down and talk is progress," Mr. Hoyer said. But he said that the plan "is not a consideration of all options available to America."
At the morning press briefing, Mr. Boehner refused to respond to questions about whether he would support a short-term debt-limit increase to keep the government solvent while talks were under way. But Rep. Tom Cole (R., Okla.), a close Boehner associate, said Republicans might be willing to pass a debt-ceiling extension in order to start broader talks over reducing the deficit. "If the president is willing to talk, I suspect we could deal with these problems," Mr. Cole said.
In the Senate, Democrats prepared for votes later this week to extend the nation's borrowing authority through 2014, in a fresh sign the focus of the budget impasse is shifting toward preventing a U.S. debt default.
Democrats are still weighing their opening bid, but the most likely scenario is to advance a debt-limit bill free of extraneous policy amendments, as Mr. Obama has demanded. House Republicans say they won't pass any such debt-limit extension unless it is accompanied by deficit-reduction measures or other priorities.
The Treasury says the debt ceiling must be raised this month or it won't be able to pay all the country's bills. With that prospect approaching, the standoff over increasing the borrowing limit has merged with a related impasse over terms for funding the government so that it can fully reopen.
Treasury Secretary Jacob Lew is making a trip to Capitol Hill on Thursday to answer questions about the debt ceiling in front of the Senate Finance Committee, giving Republicans a chance to press him for potential areas of compromise.
Senate Democrats would need 60 votes to advance any debt-ceiling plan if Republicans decide to filibuster. Democratic aides expressed confidence that all 54 Democrats and allied senators would support the bill being considered, but one aide said it might be hard to persuade Republicans to cross party lines until the prospect of the U.S. reneging on some of its obligations is closer.
Sen. John McCain (R., Ariz.) said he was on the fence about the proposal and wanted to see what else Democrats were offering. "The markets will not stand for default," Mr. McCain said. "I want it done."