Updated at 9 am though 8:27 pm EDT
Often, on days like these — and there have been dozens of them lately — the morning dawns with a breeze of optimism. By mid-afternoon, all that was dashed.
By evening, it grew darker inside the Capitol. Then hope re-emerged.
As suddenly the nation’s credit ratings were in question again.
The Senate’s Democratic and Republican leaders had been negotiating an end to the shutdown and extension of the nation’s debt limit on the 15th day of a partial government shutdown, two days from the expiration of the nation’s borrowing authority.
Leaders of both parties were voicing optimism last night, but those talks had stalled at nightfall today. And the House’s Republicans have not been able to chart their own course — they hoped to vote on a plan contrasting with the Senate’s ideas tonight, but then postponed that.
After a few days of talks, Senate Majority Leader Harry Reid “stunned” Democratic senators this afternoon telling them there’s “no deal — (Senate Republican Leader Mitch) McConnell stepped away,” Chris Coons, a Delaware Democrat, said following a Senate luncheon. “No balanced, bipartisan, reasonable, outcome in the Senate is safe from the House Republicans,” Coons said. “This is a reckless, stunning reversal.”
However, McConnell aide Michael Brumas said the Republican leader had not walked away from the talks. An aide for Reid said they were on hold until the House acted, potentially on a plan the White House already has rejected.
“We just need to wait and see what the House does,” said Reid spokesman Adam Jentleson. “We expect them to fail and then the Senate deal will re-emerge.”
And then tonight, as the House appeared mired, the Senate’s leaders said they were talking again and could be making significant progress.
“Senator Reid and Senator McConnell have re-engaged in negotiations and are optimistic that an agreement is within reach,” Adam Jentleson, Reid’s spokesman, said in a statement tonight.
VIDEO: Reaction to latest House Republican “plan.” http://t.co/6YgoDChMDK
— Senator Harry Reid (@SenatorReid) October 15, 2013
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The House stalled a potential vote tonight on a fiscal plan containing almost none of the Republicans’ initial conditions for ending the 15-day-old government shutdown and raising the debt ceiling, Bloomberg’s Richard Rubin, Kathleen Hunter and Roxana Tiron report.
House Speaker John Boehner was making a last-minute attempt to influence the outcome of the fiscal showdown before the nation’s borrowing authority lapses Oct. 17. Unlike previous stopgap spending legislation, the House bill wouldn’t make major changes to the president’s 2010 Affordable Care Act, and it contains none of the cuts to entitlement programs Republicans sought to add to a debt-limit increase.
House Republicans have a 232-200 majority and they will need all but 15 members to support a plan. House Democratic Leader Nancy Pelosi of California called the tabled Republican plan a path to default.
“We’re at the 11th hour here,” said Sen. Chuck Schumer, a New York Democrat. “The train to avoid default was smoothly heading down the tracks and picking up speed, and all of a sudden at the last minute, Speaker Boehner decides to throw a log on those tracks. Enough already.”
The House Republican plan emerged as Fitch Ratings put the U.S. AAA credit grade on ratings watch negative, citing the government’s inability to raise the debt ceiling in a timely manner, according to a statement after New York markets closed. Fitch also said it does not expect a default on U.S. debt.
— Deliverable Gold (@DeliverableGold) October 15, 2013
In a perverse way, the fact the House can’t vote on a bill might actually speed up a Senate driven solution.
— Chuck Todd (@chucktodd) October 15, 2013
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President Barack Obama was voicing confidence in his stance against negotiating the terms of a debt-ceiling increase, as Bloomberg’s Mike Dorning and Lisa Lerer report.
With recent polls showing the public blaming Republicans more than the president for the stalemate, Obama faces little political pressure to make concessions. He says Republicans now know they went too far after seeing the reaction from voters.
“I’m pretty sure they’re not going to run this play again,” Obama said today in an interview with WABC television in New York, one of three local stations granted interviews.
— Eyewitness News (@eyewitnessnyc) October 15, 2013
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The government shutdown has closed national parks, monuments, museums — and Ford’s Theatre.
Now billionaire and political contributor Ronald Perelman has come to the rescue of the national historical site and performing arts center in Washington, Bloomberg Muse’s Stephanie Green reports.
Perelman, a Ford’s trustee and chairman of MacAndrews and Forbes, ponied up $25,000 in an emergency contribution to keep the theater, which closed due to the Oct. 1 partial shutdown of the government, up and running and open for tours over the next eight days, starting tomorrow.
Abraham Lincoln was shot at the theater in 1865. As part of The Lincoln Legacy Project, the theater launched a series of programs based on tolerance and acceptance.
Performances of “The Laramie Project,” a play centered around the 1998 hate murder of Matthew Shepard, were moved to First Congregational United Church of Christ nearby. Perelman’s gift allows the play to return to the theater.
Perelman, with an estimated net worth of $14.5 billion and the 62nd richest person in the world, according to the Bloomberg Billionaires Index, raised money for Republican Mitt Romney’s 2012 presidential campaign.
Green is a writer and photographer for Bloomberg Muse, the arts and leisure section.
— Ford’s Theatre (@fordstheatre) October 15, 2013
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The American public, albeit only narrowly, believes leaders will resolve the debt debate by their deadline.
With two days left before the U.S. exhausts its borrowing authority, 51 percent of Americans surveyed say raising the debt ceiling is “absolutely necessary” and 52 percent expect political leaders to do it.
A similar number of Tea Party Republicans say there is no need to raise the debt limit.
These are the findings of a Pew Research Center survey.
“Public concern over breaching the debt limit deadline has risen only slightly from a week ago,” Pew reports, “when 47 percent said a rise in the debt limit was essential and 39 percent said it was not.”
Tea Party leaders aren’t getting their debt-problem denial lines from nowhere:
“Those who see no dire economic consequences resulting from going past Thursday’s deadline are not only skeptical about the timing – most say there is no need to raise the debt limit at all,” Pew notes. “Nearly a quarter of all Americans (23 percent) – including 37 percent of Republicans and 52 percent of Tea Party Republicans – believe the debt limit does not need to be raised at all.
The national survey of 1,504 adults was conducted Oct. 9-13 — on Days 9 through 13 of the partial government shutdown.
* * *
“We’re encouraged by the progress we’ve seen from the Senate, but we’re far from a deal at this point,” White House Press Secretary Jay Carney told reporters at the daily press briefing after 12:30 pm.
The House’s Republicans, he said, “are going back and trying to add some sweeteners for the Tea Partiers.”
Asked what the real deadline for action is, Carney did some dancing.
Oct. 17 is the day the U.S. runs out of borrowing authority, he noted. After that, the government only has cash on hand to pay bills. Yet that cannot last long, because the U.S. must borrow to meet all its obligations.
“On Oct. 17, we cease to have borrowing authority. We only have cash on hand,” he said. “There is a scenario by which we will not be able to pay all our bills.”
* * *
Even in a government shutdown, one must eat:
I think many Americans would be surprised to learn that even during the shutdown, the Senate cafe serves this pic.twitter.com/iqk86bo7r8
— Mark Halperin (@MarkHalperin) October 15, 2013
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The House Republicans’ response to the Senate’s proposed agreement today isn’t going over well at the White House — the idea of adding a delay in the medical devices tax that is part of the president’s health-care plan to an extension of the debt ceiling and reopening of the shuttered government.
“The president has said repeatedly that members of Congress don’t get to demand ransom for fulfilling their basic responsibilities to pass a budget and pay the nation’s bill,” White House spokesman Amy Brundage said in a statement issued. “Unfortunately, the latest proposal from House Republicans does just that in a partisan attempt to appease a small group of Tea Party Republicans who forced the government shutdown in the first place.”
“Democrats and Republicans in the Senate have been working in a bipartisan, good-faith effort to end the manufactured crises that have already harmed American families and business owner,” Brundage said. “With only a couple days remaining until the United States exhausts its borrowing authority, it’s time for the House to do the same.”
Senate Majority Leader Harry Reid told the Senate: “Let’s be clear: The House legislation will not pass the Senate.”
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It may not pass the House either.
House Speaker John Boehner said this morning that there has been no decision about the course his chamber will take — there are “lots of opinions” about which way to go, he told reporters, yet no decisions.
“It’s been very clear all along… what we’ve wanted,” House Majority Leader Eric Cantor told reporters late this morning. He said they “encourage” the negotiations taking place in the Senate.
“We’re working with our members on a way forward,” said Boehner, asked if Congress will permit the government to default on its debts. “I have made clear for months and months that the idea of default is wrong and we shouldn’t get anywhere close to it,” Boehner said.
Today’s update: John Boehner to decide whether to blow up the world now http://t.co/GNhYqjVrVa
— New York Magazine (@NYMag) October 15, 2013
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“What you saw here was a speaker who does not have the votes for his proposal,” House Minority Leader Nancy Pelosi said shortly before noon, asking why Republicans are “wasting time” with a debt-ceiling nearing. Breaching the limit could put everyone’s 401-K funds at risk, the California Democrat told reporters. “This Republican sabotaging of any effort to move forward is a luxury our country can’t afford.”
After two weeks of government shutdown, Rep. Xavier Becerra, a California Democrat and chairman of his party’s House caucus, said, “We’re now on the verge of watching Republicans shut down the economy as well.”
— Nancy Pelosi (@NancyPelosi) October 15, 2013
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The Senate Republican leader is taking some heat for the shutdown back home.
“Let’s not forget that this is the same Mitch McConnell who, along with members of his own party, created the shutdown mess, and in turn, hurt Kentucky’s children, seniors, veterans and middle-class families,” Jonathan Hurst, an adviser to Democratic Senate candidate Alison Lundergan Grimes, wrote in an e-mail yesterday.
“Now as the markets slide and McConnell believes his own finances will be impacted, Senator Gridlock hopes to swoop in for a last-minute backroom deal,” the campaign of the Republican senator’s 2014 opposition says. “Kentuckians will see right through his veiled attempts to protect the millionaires and billionaires backing his campaign and efforts to distract from his key role in Washington’s dysfunction.”
The Senate Conservatives Fund, the organization started by former Sen. Jim DeMint of South Carolina, is shooting from the other side: “Unfortunately, Senate Republican Leader Mitch McConnell (R-KY) has made winning virtually impossible,” executive director Matt Hoskins wrote in an email today. “McConnell has consistently worked to sabotage the effort to defund Obamacare. He pressured senators to withdraw their support, he falsely accused conservatives of wanting a government shutdown, and he voted to give the Democrats the power to fund Obamacare.”
* * *
The House’s Republicans opened their caucus meeting this morning with a song.
Three verses of “Amazing Grace.”
From the first verse:
I once was lost but now am found, was blind, but now I see.
From the third verse:
‘Tis Grace that brought me safe thus far., and Grace will lead me home.
At start of GOP conf meet Rep. outherland sang several verses of “Amazing Grace.” Was his turn to lead prayer, others joined in
— Mike Memoli (@mikememoli) October 15, 2013
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Add a new word to the shutdown glossary:
Seppuku : A Japanese ritual of suicide by disembowelment, practiced by Samurai.
What’s unknown is whether House Republicans who insisted on the partial shutdown of the government in their battle against the president’s health-care law are capable of this punishment now that senators are exploring a way out.
This seasoned Republican strategist counts on the majority saving them:
Key is this: will strong maj of House GOP caucus want to end the Seppuku idiocy and move on. My guess is yes. #HastertRulePrimary
— mike murphy (@murphymike) October 15, 2013
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Close to a deal, close to a cliff:
The third week of the partial government shut-down opened with a sense of a potential solution, finally, in the form of a possible Senate agreement to operate the government into January and raise the federal debt ceiling into February.
The biggest question is how the accord that Senate Majority Leader Harry Reid and Republican Leader Mitch McConnell have been forging would play on the street — around First Street in Washington. The Senate’s Republicans take a look at it this morning.
In the House, the hardest-line Republicans already are dismissing it as “kicking the can down the road.” There is a provision in it, delaying the imposition of a government fee on health plans to serve as a reinsurance fund, that could give House Republicans the trophy they’ve sought in their war against “Obama-care.” Or not.
That road holds an ominous obstacle: The Oct. 17 expiration of the government’s borrowing authority, after which all economic bets are off if no agreement is reached.
Read below why Oct. 17 is not the end of the game.
* * *
Boehner later walked this back: House Republicans planned to take their own bill to a vote today, according to Rep. Darrell Issa of California, who joined his party’s caucus conference this morning. It would address the medical devices tax that is part of the president’s health-care law, proposing a two-year-delay in a provision that is supposed to generate $30 billion over 10 years.
“We have a Republican alternative” that is “considerably better” than the Senate plan, Issa told reporters. “If the Senate wants to say, `my way or the highway’, then I suggest Senate Republicans not go along with that strategy.”
So, Boehner and the leadership may escape today w/ a passed House plan. Looming unanswered Q: is that House’s final play?
— Robert Costa (@robertcostaNRO) October 15, 2013
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Resistance to the Senate’s plan from Republicans in the House could be a problem.
The National Review’s Robert Costa reports this morning:
“In a few minutes, House Republicans will meet in the Capitol’s basement. The chief topic of conversation: the emerging Senate deal. But before the meeting even begins, House conservatives are bashing it behind the scenes, and they’re pushing the leadership to reject the compromise. A flurry of phone calls and meetings last night and early this morning led the consensus among the approximately 50 Republicans who form the House GOP’s right flank. They’re furious with Senate Republicans for working with Democrats to craft what one leading Tea Party congressman calls a “mushy piece of s—t.” Another House conservative warns, “If Boehner backs this, as is, he’s in trouble.”
“But that’s unlikely to happen. As of 8:30 a.m., House conservatives believe the leadership is well aware of their unhappiness, and they expect Boehner to talk up the House’s next move: another volley to the Senate, which would extend the debt ceiling, reopen the government, and set up a budget conference, plus request conservative demands that go beyond the Senate’s outline.”
House conservative stategist who works closely with right flank: Sen deal DOA among Bloc of 50 http://t.co/0KCKA62tvp
— Robert Costa (@robertcostaNRO) October 15, 2013
Today a test of House Republicans who say they are not right-wing or Tea Party folks. Do they finally force an end to the #shutdown or not?
— EJ Dionne (@EJDionne) October 15, 2013
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McConnell: Good-Faith Negotiations Continue: http://t.co/8dsOutL5M6
— Sen. McConnell Press (@McConnellPress) October 14, 2013
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— Businessweek (@BW) October 15, 2013
Senate leaders are poised to reach an agreement as early as today to bring a halt to the fiscal standoff, and now must race the clock to sell the plan to the rest of Congress before the government’s borrowing authority runs out this week, Bloomberg’s Richard Rubin, Kathleen Hunter and Roxana Tiron report this morning.
The emerging deal would stave off a potential default, end the 15-day-old government shutdown and change the immediate fiscal deadlines in favor of three new ones over the next four months. It’s far from complete as the Senate may delay passing the plan and House Republicans may seek to block or amend it.
Under this plan, lawmakers would be required to hold budget talks by Dec. 13, fund the government through Jan. 15, 2014 and extend the nation’s borrowing authority until Feb. 7, 2014, according to a person familiar with the Senate talks.
“We’ve made tremendous progress,” Senate Majority Leader Harry Reid said yesterday on the Senate floor with his Republican counterpart, Mitch McConnell. “We are not there yet.”
* * *
In the process, Democrats are shifting the center of the debate from the Affordable Care Act, President Barack Obama’s signature health-care law offering insurance to millions who lack it, to the bigger federal budget: Specifically, the “sequestration” that has imposed automatic cuts in Defense and other discretionary spending. That Jan. 15 deadline coincides with the calendar for the continuation of that budget cutting.
Why Harry Reid Fears a Long-Term Shutdown Deal http://t.co/FFOX9Yxwil
— Mother Jones (@MotherJones) October 15, 2013
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An agreement would forestall the immediate crisis. It would end the shutdown that has closed many federal services and prevent a possible U.S. default that the Treasury Department said could be catastrophic.
“Lawmakers, who have governed from fiscal crisis to fiscal crisis for more than two years, may just be setting up more crises in the near future,” Rubin, Hunter and Tiron note. “The agreement would delay the next major deadline — the Jan. 15 lapse in government funding — until after the Christmas holiday shopping season.”
There are two potential obstacles to any agreement, they report. First, a single senator could use procedural tactics to push a final vote past the Oct. 17 lapse in borrowing authority. Texas Republican Sen. Ted Cruz, who spoke for more than 21 hours during a budget debate last month in a failed bid to block the president’s health-care program, wouldn’t rule out any stalling maneuvers, saying he wants to see the details.
Second, House Republicans, who have demanded major changes to the health care law, may resist any proposal that contains few of their priorities.
“Sounds like everything the president asked for,”Rep. Blake Farenthold, a Texas Republican aligned with Tea Party movement, said yesterday about the Senate framework.
Big businesses & Congress got exemptions from Obamacare while big labor lobbies for theirs. RT if you want an exemption too! #MakeDCListen
— Senator Ted Cruz (@SenTedCruz) October 14, 2013
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Cruz’s own assault on Obama-care is unrelenting, regardless of what the Senate and House decide to do about the fiscal stand-off.
When people spend hours in line waiting for an iPhone it’s because they want to. #ObamacareIsNotAniPhone
— Senator Ted Cruz (@SenTedCruz) October 13, 2013
Democrats, looking at the polls that show growing public opposition to the way the Republicans have handled this standoff, count in it backfiring on Cruz and company.
Obamacare is no longer Republicans’ #1 issue. Their #1 issue is to divert attention from the fools they’ve made of themselves on Obamacare.
— Senator Harry Reid (@SenatorReid) October 12, 2013
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The day after tomorrow represents the beginning of Washington’s debt-crisis end game, not the end of it, Bloomberg’s David Lynch reports today.
“The Treasury Department expects to exhaust its borrowing authority no later than Oct. 17, leaving the federal government with no more than $30 billion on hand,” Lynch explains. “Depending upon daily tax receipts and incoming bills, the U.S. government could be forced to default on its obligations at any date thereafter — to bond holders and millions of Social Security recipients.”
Obama said yesterday that the U.S. now faces “a good chance of defaulting,” a development that would have a “devastating effect” on the economy. Though that would roil financial markets and risk triggering a global recession, the full effect would take time to unfold. Oct. 18’s dawn may seem little changed from that of the day before.
“It’s not that you know there’s one date where the whole thing is going to go kaboom,” said Shai Akabas, a senior analyst at the Bipartisan Policy Center. “It’s that you have increasing risks, because we’ve never encountered this series of events in our modern history so we really don’t know what’s going to happen. But it’s fairly safe to say that the further we go without a resolution, the more the risks increase.”
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— Bipartisan Policy (@BPC_Bipartisan) October 14, 2013
The Bipartisan Policy Center, a Washington-based nonprofit research group, estimates that the Treasury will actually be unable to pay all the government’s bills on time at some point between Oct. 22 and Nov. 1, Lynch reports. While the Treasury will probably be able to delay the true drop-dead date for a few days, it is unlikely to be able to do so beyond Nov. 1 because several large payments are due before then, the center says.
On Oct. 23, $12 billion in Social Security checks are scheduled to go out. A $6 billion interest payment on the national debt is due Oct. 31 and more than $55 billion in Social Security, Medicare, veterans benefits and military pay is slated for the first of the month.
The Treasury has the means to avoid a debt default by husbanding the tax money to cover interest payments on the debt, according to economists at Goldman Sachs Group Inc., IHS Inc., and BNP Paribas SA. Even so, that would require other government spending to be cut so deeply that a recession would follow, said Jim O’Neill, former chairman of Goldman Sachs Asset Management and now a Bloomberg View columnist.
Treasury Secretary Jack Lew dismisses suggestions that he could prioritize payments, calling that strategy “default by another name.”
Ticking time bomb: Why Wall Street cares about the debt-default deadline http://t.co/caku2uqvVj
— NBC News (@NBCNews) October 15, 2013