Harry Reid makes budget offer to Mitch McConnell
By: Manu Raju and John Bresnahan and Jake Sherman
October 14, 2013 09:27 AM EDT
Senate Majority Leader Harry Reid has privately offered Senate Minority Leader Mitch McConnell a deal that would reopen the government until mid-to-late December while extending the U.S. debt ceiling until next year, according to several sources familiar with the talks.
The proposal would set up a framework for larger budget negotiations with the House over the automatic sequestration spending cuts and other major deficit issues, the sources said. Moreover, Senate Democrats are open to delaying Obamacare’s medical device tax and a requirement that those receiving Obamacare subsidies be subject to income verification — but they would have to get something from Republicans in return, sources said.
McConnell is still reviewing the offer and is privately huddling with groups of GOP senators Monday who could be key to providing enough votes in the Senate. On Monday morning, McConnell met with Sens. John McCain of Arizona, Susan Collins of Maine, Lisa Murkowski of Alaska, Mike Johanns of Nebraska and Mark Kirk of Illinois.
After leaving the meeting with McConnell, McCain said he would be “surprised” if a deal were struck on Monday but said the leaders are deep in the specifics.
Reid went into McConnell’s office just before noon and congressional leaders from both parties are slated to meet with President Barack Obama at the White House at 3 p.m.
Under Reid’s proposal, the debt ceiling would be extended for six to nine months, and the government would be funded at $986 billion until some point in December. Doing so would punt the fight over whether to lock in 2014 sequestration levels at $967 billion until December. And by extending the debt ceiling until the middle of next year, it would put the issue in the center of the heated 2014 midterm elections.
While the proposal has similarities to one offered by Collins, it has some very key differences over the length of the stop-gap spending measure and the debt ceiling hike. Collins proposed extending government spending for six months, which Democrats objected to because they argued it would lock in the $967 billion sequestration levels for 2014 required under the 2011 Budget Control Act. She also suggested extending the debt ceiling through the end of January, far too short of a time period for many Democrats.
Time is running out. Any bipartisan agreement needs to come together very soon – either Monday or Tuesday – or else the nation runs a serious risk of running out of the ability to borrow money as soon as Thursday. In 2011, a last-minute deal to lift the debt limit resulted in a credit downgrade of U.S. debt.
On Monday morning a bipartisan group of 12 senators who have been working on a framework for a deal to reopen the government and lift the debt ceiling huddled for a“positive and optimistic” meeting, a Democratic aide said. Sens. Joe Manchin (D-W.Va.) and Collins, whose first stab at a solution to the impasse was dismissed by Democratic leadership and precipitated the talks between Reid and McConnell, were included in the meeting.
After a weekend legislative session in the Senate and House, talks appear to be at a standstill, largely because of disagreements over future spending levels. That’s leading to a sharp downtick in the U.S. market. The Dow Jones Industrial Average opened down nearly 100 points. Overseas markets were down slightly overnight, but the chorus of calls from foreign governments for U.S. leaders to end their fiscal infighting is getting louder by the day.
That the federal government is closed for the 14th straight day is getting lost in this debate, as hundreds of thousands of federal workers remained furloughed until Congress and the White House can reach a deal to end the partisan stalemate.
On Sunday, Reid said he and McConnell had a “productive” discussion, but no deal was reached. Some Senate Democrats are pushing to end the sequester spending levels enacted under the 2011 Budget Control Act, a non-starter for McConnell and House Republicans. Two men close to Reid and McConnell respectively, Sens. Chuck Schumer (D-N.Y.) and Lamar Alexander (R-Tenn.), remain involved in the talks and continue to play a facilitating role between the two party leaders, aides said.
Senators eager to strike a deal to avert a catastrophic breach of the debt ceiling after Thursday remain optimistic that the two leaders can put bad blood from past political fights behind them to avoid a default.
“There’s a lot of concern about whether we’re going to meet this deadline. I think at the end of the day we will, but to do so we really have to move ahead today with a Senate agreement,” said Sen. Bob Corker (R-Tenn.) on NBC’s “Today.”
McConnell is also aiming to change Obama’s signature health care law, but Republican efforts to repeal or defund Obamacare have largely ended.
On another track, House Republican leadership is readying itself to lift the debt ceiling for six weeks. House GOP aides stress that no decisions have been made, but this legislation is unlikely to be “clean” – meaning it will contain a number of conservative policies attached. Options under consideration include language to cancel health insurance subsidies for members of Congress, their aides and the White House, and an amendment to tighten requirements for health-insurance related subsidies.
House Republicans are expected to meet Tuesday morning to discuss their options. A topsy-turvy day in financial markets could create some pressure to act. The Senate will hold a vote on judicial nominations Monday afternoon, in order to have all senators in one place at one time.
If something comes out of the Senate, Speaker John Boehner (R-Ohio) will be in a difficult spot. The House and Senate have been miles apart all year, and Boehner will likely have to put something on the floor that will pass with minimal Republican support.
Boehner has a few options. He could pass his own bill, which would face an uncertain future in the Senate. He could pass a Senate deal, if it comes together — a legislative defeat for House Republicans. Or he could change what comes up in the Senate, and send it back — that scenario seems most likely, since House Republicans will want their imprimatur on whatever becomes law.