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Copyright 2016 NPR. To see more, visit http://www.npr.org/.

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Shutdown Diary: Boehner Offers Debt Limit Deal

Oct 10, 2013
Originally published on October 10, 2013 7:33 pm

Day 10 of the partial government shutdown brought a flurry of excitement — enough to get Wall Street's animal spirits going as investors were optimistic that the U.S. might avoid a default.

Unfortunately, furloughed federal workers who don't know when they'll be paid next weren't as sanguine. The day's highlights:

Boehner's Proposal

Speaker John Boehner said House Republicans would offer President Obama and Senate Democrats a six-week debt ceiling extension with a big condition: Obama would need to agree to negotiate with Republicans over reopening the government and entitlement spending.

The proposal to extend the debt ceiling to Nov. 22 (which happens to be the 50th anniversary of the John F. Kennedy assassination, though I'm no conspiracy theorist) came hours before a group of House GOP leaders were to sit down with Obama Thursday afternoon at the White House for talks.

Boehner explained to reporters at a Thursday morning media availability the House Republican Conference's rationale:

"So what we want to do is to offer the president today the ability to move — a temporary increase in the debt ceiling, an agreement to go to conference on the budget — for his willingness to sit down and discuss with us a way forward to reopen the government and to start to deal with America's pressing problems."

Democratic Doubts

For Democrats, there were at least two immediate problems with the House GOP proposal, however. One, it would require them to accept a condition on a debt ceiling raise and reopening the government, something the president and congressional Democrats have said is a nonstarter.

Two, under the House GOP proposal, affected federal agencies, workers and programs could remain sidelined for weeks until negotiations lead to the government's being reopened.

"Not going to happen," said Senate Majority Leader Harry Reid, D-Nev., of the GOP call for negotiations before the government is reopened. He was leaving a White House meeting between the president and Senate Democrats.

At a minimum, the White House welcomed the House GOP proposal as a sign that House leaders weren't as optimistic as some of their Tea Party members that a U.S. government default would amount to little more than an economic speed bump.

"The president is happy that cooler heads at least seem to be prevailing in the House, that there at least seems to be a recognition that default is not an option," said Jay Carney, the White House press secretary.

Obama was reserving judgment on the latest Republican gambit because White House officials had seen nothing from Boehner in writing, Carney said. Rep. Nancy Pelosi, D-Calif., the House minority leader, was also withholding judgment until she saw something in writing.

Nor could the White House be sure the speaker could ultimately deliver enough votes from his Republican conference for the latest proposal, Carney said.

"It's really hard to negotiate with people who are still negotiating among themselves," Pelosi said of the Republicans.

Hard-Liners Go Along

Meanwhile, some critical hard-line conservatives gave Boehner important political cover. Heritage Action for America, the Heritage Foundation's political advocacy group, said it wouldn't hold Republican lawmakers' vote in favor of the proposal against them.

In a statement, Michael Needham, Heritage Action's chief executive said:

"We do not support clean debt ceiling increases, but because Heritage Action is committed to giving House Leadership the flexibility they need to refocus the debate on Obamacare we will not key vote against the reported proposal."

If anyone needed evidence that hard-liners still wanted at least a pound of flesh from the Affordable Care Act, the Heritage Action site provided it.

Another Lew Warning

The day started with an early Senate Finance Committee hearing featuring Treasury Secretary Jack Lew, who issued his latest warning to Congress to not let the U.S. default on its obligations.

"The very last thing the U.S. economy needs now is a fight over whether we raise the debt ceiling, not when we face serious challenges both domestically and internationally that require our full attention, and not when we know the kind of damage a financial and economic crisis can cause," Lew said.

Red State Backlash

Some fascinating signs that congressional Republicans continue to be hurt by the government shutdown and debt ceiling fight continue to emerge, even in deeply red states.

Sen. Mike Lee, R-Utah, along with Sen. Ted Cruz, R-Texas, has done the most in the Senate to link funding the government to defunding Obamacare. A new poll finds that Lee's favorability rating has fallen to 40 percent — down from 50 percent — among all voters in June. Even among Republicans, it fell to 57 percent from 71 percent.

Investors Celebrate, For Now

Wall Street seemed relieved by what appeared to be progress, with the Dow Jones industrial average closing up 320 points.

Still, investors weren't uniformly upbeat. Some sold their U.S. Treasurys with maturity dates after Oct. 17 to minimize their risks of losing money if the government does, indeed, default.

Copyright 2013 NPR. To see more, visit http://www.npr.org/.