Senate leaders began negotiations Saturday aimed at reopening federal agencies and avoiding a government default after every other effort to end Congress’s impasse crumbled in the previous 48 hours.
Senate Majority Leader Harry M. Reid (D-Nev.) and Minority Leader Mitch McConnell (R-Ky.) took over the talks, which had led nowhere in recent days. House Speaker John A. Boehner (R-Ohio) acknowledged early Saturday that his discussions with President Obama had collapsed and that the Senate was the last hope to avert a financial disaster.
McConnell and Reid held an hour-long meeting in Reid’s office with two close Senate allies and left the Capitol by mid-afternoon. Late Saturday night neither side cited any progress, and Republicans reported that Democrats were dug in on their demand to increase funding for federal agencies.
During the fiscal crises that have gripped Capitol Hill over the past five years, each resolution and compromise came after Senate leaders picked up the pieces of failed efforts between the White House and the House.
In the morning session, Reid rejected a proposal crafted by rank-and-file Republicans with some Democratic input to raise the federal debt limit until Jan. 31 and fund federal agencies through the end of March. It also called for minor adjustments to Obama’s health-care law .
At an afternoon news conference, Reid said he wanted a shorter period for stopgap funding and a longer extension of the Treasury’s borrowing authority. Reid particularly wants to scale back deep automatic spending cuts known as the sequester, which were passed during the 2011 debt-ceiling showdown and will take effect every January for the next decade, unless Congress amends them.
Sen. Richard J. Durbin (Ill.), the No. 2 Democrat in the Senate, called that issue “really the single biggest sticking point.”
The slow-moving talks appeared to nix earlier hopes that at least an outline for a deal could be in place before the financial markets opened Monday, as some senior senators suggested when momentum seemed to be building toward a plan by Sen. Susan Collins (R-Maine).
Senate Republicans — already stunned by Boehner’s inability to pass anything in the House — grew furious about Reid’s attempt to get relief from the sequester because they considered Collins’s plan the fastest path to a deal.
“This thing has gotten to the point of a real crisis for the country, and everybody keeps changing their position based on politics,” Sen. Lindsey O. Graham (S.C.) said after a long huddle on the Senate floor with McConnell and other Republicans.
It was a dramatic turnabout from Thursday morning, when Boehner’s leadership team signaled that it would support increasing the debt ceiling until almost Thanksgiving with the only demand being that Obama negotiate over a broader budget framework in the interim. With pressure on the debt issue appearing to ease, financial markets staged their biggest rally in a month.
The president, however, rejected Boehner’s offer because it did not address reopening the government, which has been closed since Oct. 1. Instead, the White House grew interested in the Senate talks over Collins’s plan because of its longer debt-ceiling window. According to the administration, Treasury Secretary Jack Lew will run out of options after Thursday for juggling the nation’s books, and by the end of the month, the Treasury will run out of cash to pay the government’s bills.
Collins, along with GOP Sens. Kelly Ayotte (N.H.) and Lisa Murkowski (Alaska), worked with Democrats to draw up a 23-page draft that would have ended the shutdown and funded federal agencies for six months at current spending levels. It would have left intact the sequestration cuts scheduled to hit Jan. 15 but would have given agency officials flexibility to decide where the reductions should occur.
In addition, the proposal would raise the debt limit through Jan. 31, setting up a path for the two sides to have broad budget talks to try to tackle the issues of taxes and entitlement reform.
In exchange, Republicans sought tweaks to Obama’s Affordable Care Act, including a two-year delay of a 2.3 percent tax on medical devices that is unpopular in both parties.
Reid and McConnell met with two allies who had been working with Collins — Sens. Charles E. Schumer (D-N.Y.) and Lamar Alexander (R-Tenn.) — when Reid rejected that plan but the talks continued.
Democrats want a shorter extension of government funding so that they can try to press the Republicans, whose party’s image has been battered in recent weeks, for more savings from the sequestration cuts in negotiations that would take place in the near term — rather than waiting until March, when the spending cuts will have taken effect.
In addition, Reid told reporters that he will make no concessions on the health-care law.
The Reid-McConnell negotiations will test a relationship that has been deeply frayed in the past three years, when McConnell has served as a key closer on several fiscal deals but has done so by going around Reid to Vice President Biden.
Rather than focusing on the acrimonious days, however, Reid recalled their bipartisan work together nine years ago to revamp the Senate’s oversight of national security agencies. But he warned that a deal will take time.
“We don’t have anything done yet, and a long ways to go before anything like that will happen,” he said.
If an agreement were reached, time would become a factor. Unless every senator agreed to expedite the process — including conservative firebrands such as Ted Cruz (R-Tex.) and Mike Lee (R-Utah) — it would take until at least late in the week to clear the Senate.
The bill would then go to the House, where it would face an uncertain fate.
Boehner’s closest friends in the Senate, including Graham and Sen. Saxby Chambliss (R-Ga.), pleaded with him Friday to modify his legislation along the lines of what they were trying to broker across the Capitol. The speaker told them Saturday that the Collins plan would face opposition from too many Republicans for him to put it on the floor, Chambliss said.
“We don’t support it,” House Budget Committee Chairman Paul Ryan (R-Wis.) told reporters, saying that the reasons for opposition were “too many to go into.”
In a raucous meeting in the Capitol basement Saturday morning, Boehner told his Republican colleagues that talks between the House GOP and Obama had broken down. He and House Majority Leader Eric Cantor (R-Va.) urged members to hold firm, several said, as McConnell and Reid worked on a deal.
“All eyes are now on the Senate,” said Rep. Adam Kinzinger (R-Ill.).
The leaders, however, began the meeting trying to prepare their troops for the likelihood that they would have to adopt a deal cut in the Senate. Both leaders explained that the White House is no longer willing to negotiate with the House, that McConnell and Reid were talking, and that a bipartisan agreement is likely to emerge that will need the House’s approval.
But instead of absorbing this painful reality, some rank-and-file Republicans grew visibly excited about the prospect of opposing such a deal, said one person in the room. This defiance was fed by Ryan, who stood up and railed against the Collins proposal, saying the House could not accept either a debt-limit bill or a government-funding measure that would delay the next fight until the new year.
According to two Republicans familiar with the exchange, Ryan argued that the House would need those deadlines as “leverage” for delaying the health-care law’s individual mandate and adding a “conscience clause” — allowing employers and insurers to opt out of birth-control coverage if they find it objectionable on moral or religious grounds — and mentioned tax and entitlement goals Ryan had focused on in a recent op-ed in the Wall Street Journal.
Ryan’s speech appeared only to further rile up the conservative wing of the GOP conference, which has been agitating the shutdown strategy to try to tear apart the health-care law.
With such fervor still rampant among House Republicans, there was bipartisan agreement in the Senate that Boehner’s House had lost its ability to approve anything that could be signed by Obama into law. Republicans decided the Senate must act first, hoping that the pressure of the Thursday debt deadline would lead to the House passing the measure even if it meant just a small collection of the GOP’s House majority joined with the Democratic minority to approve a deal.
“At this point, they have dealt themselves out of this process. They cannot agree among themselves,” Durbin said. “And that makes it extremely difficult to take them seriously.”
Rosalind S. Helderman, Jackie Kucinich and Jeff Simon contributed to this report.