| CNN International | - |
Washington
(CNN) -- Senate leaders on Wednesday announced a deal to end the
partial government shutdown and avoid a possible U.S. default, and House
Speaker John Boehner urged fellow Republicans to support it while a key
GOP conservative said ...
Boehner urges House GOP to support Senate deal
updated 6:18 PM EDT, Wed October 16, 2013
Shutdown deal announced on Senate floor
STORY HIGHLIGHTS
- NEW: Senate vote expected by 7 p.m. ET on Wednesday
- House GOP leaders urge Republicans to back Senate plan
- GOP Sen. Ted Cruz says he will not block the Senate deal
- U.S. government's authority to borrow money to pay bills runs out on Thursday
"We fought the good
fight; we just didn't win," Boehner told a radio station in his home
state of Ohio in reference to GOP efforts to dismantle or defund
President Barack Obama's signature health care reforms and extract
deficit reduction concessions around the need to fund the government and
raise the federal borrowing limit.
The Democratic-led Senate
was expected to pass the agreement in a vote expected to take place by 7
p.m. ET on Wednesday night, followed within hours by a vote in the
Republican-led House.
Both chambers will have
to take special steps to get the legislation passed that quickly,
raising concerns that tea party conservatives led by Sen. Ted Cruz of
Texas would block or delay it in a final effort to include provisions
intended to harm Obama's signature health care reforms.
However, Cruz told
reporters that he wouldn't mount a filibuster or employ other procedural
moves against the agreement. At the same time, he criticized his Senate
colleagues for what he called their failure to listen to the American
people and said the fight against Obamacare will continue.
National polls conducted
since the start of the shutdown on October 1 indicate that while all
sides are feeling the public's anger over the partisan political
impasse, Republicans are getting blamed more than than Democrats or
Obama.
Boehner and other House
Republican leaders told their caucus they would vote for the agreement
at an afternoon meeting that participants said ended with a standing
ovation for the embattled speaker.
"Blocking the bipartisan
agreement reached today by the members of the Senate will not be a
tactic for us," Boehner said in a statement. "Our drive to stop the
train wreck that is the president's health care law will continue."
News of the deal brought
some relief to Wall Street as well as Washington, where the shutdown
reached a 16th day with the government poised to lose its ability to
borrow more money to pay bills after Thursday.
Senate Majority Leader
Harry Reid hailed the agreement he worked out with his GOP counterpart
Mitch McConnell as "historic," saying that "in the end, political
adversaries put aside their differences."
Obama praised Senate
leaders for reaching a compromise, and urged Congress to act quickly,
White House spokesman Jay Carney said.
"As soon as possible is essentially the recommendation we have from here," he said.
U.S. stocks rose on the
news of an agreement, with the benchmark Dow Jones Industrial Average
jumping more than 200 points on the day.
Short-term plan
Reid said the Senate
deal under discussion would reopen the government by funding it until
January 15. It also would raise the debt limit until February 7 to avert
a possible default on U.S. debt obligations for the first time.
It includes a provision to provide back pay to furloughed federal workers, leadership and congressional sources told CNN.
In addition, the White
House supports a provision in the deal that strengthens verification
measures for people getting subsidies under Obamacare, spokesman Jay
Carney said.
Carney called the change
"a modest adjustment," and said it didn't amount to "ransom" for
raising the federal debt ceiling because both sides agreed to it and the
White House supported it.
The Senate agreement also would set up budget negotiations between the House and Senate for a long-term spending plan.
McConnell fired an
opening salvo for those talks, expected to begin soon and continue until
December, when he said any ensuing budget deal should adhere to
spending caps set in a 2011 law that included forced cuts known as
sequestration.
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"Preserving this law is
critically important to the future of our country," McConnell said of
the Budget Control Act, which resulted from the previous debt ceiling
crisis in Washington.
The focus on an
agreement shifted to the Senate after House Republicans failed on
Tuesday to come up with a plan their majority could support, stymied
again by demands from tea party conservatives for outcomes unacceptable
to Obama and Senate Democrats, as well as some fellow Republicans.
Cruz, despite being in
the Senate, is credited with spearheading the House Republican effort to
attach amendments that would dismantle or defund the health care
reforms known as Obamacare to previous proposals intended to end the
shutdown.
All were rejected by the
Democratic-led Senate, and Obama also pledged to veto them, meaning
there was no chance they ever would have succeeded.
Republican Sen. Kelly
Ayotte of New Hampshire called the House GOP tactic of tying Obamacare
to the shutdown legislation "an ill-conceived strategy from the
beginning, not a winning strategy."
However, Republican Rep.
Steve King of Iowa advocated continued brinksmanship to try to change
Obamacare, which conservatives detest as a big-government overreach.
"If we're not willing to
take a stand now, then when will we take this stand?" he told CNN's
"New Day," adding that if "the conservative Republican plan had been
implemented five years ago, say at the inception of what is now the
Obama presidency, we would have far less debt and deficit."
Warnings of default
Despite warnings by
Obama and economists that a U.S. default would spike interest rates and
could have catastrophic impacts at home and abroad, King said he's not
too concerned if the government passes Thursday's deadline to raise the
borrowing limit.
"It's just a date they
picked on the calendar," he said, adding that the government will still
be able to pay the interest on its debt. "I'm more concerned about
market reaction than I am of default itself."
Thursday marks the day
the Treasury Department will run out of special accounting maneuvers to
keep the nation under the legal borrowing limit. From that point on, it
will have to pay the country's incoming bills and other legal
obligations with an estimated $30 billion in cash, plus whatever daily
revenue comes in.
The White House had said
that the U.S. would lose its borrowing authority on Thursday, leaving
it only with cash on hand to pay bills and therefore at risk of default.
Carney clarified Wednesday that the borrowing authority would continue
through Thursday.
The expectation is that
the Treasury will be able to pay bills in full for a short time after
Thursday, but exactly how long remains unclear. According to the best
outside estimates, the first day the government will run short of cash
could come between October 22 and November 1.
Officials warn that an
unknown is whether creditors such as foreign countries that
traditionally roll over their U.S. bond holdings could decide to instead
cash out, creating a potentially major payout that the government would
lack funds to fulfill.
A break from tradition
If the Senate passes the
agreement as expected, the House vote will likely consist of most or
all of the chamber's 200 Democrats joined by some -- but not a majority
-- of their Republican colleagues in supporting it. At least 20 or so
Republicans would have to back the Senate plan for it to pass.
Slow process
Any delay in the legislative process could result in the nation running out of its borrowing authority.
While tax revenues will
continue to stream in, that money will be enough to pay only part of the
government's obligations over time. The impact is unclear in the
immediate short term, but over days and weeks, it would mean that
government officials would have to pick and choose which bills to pay
and which to leave for another day.
The prospect of the U.S.
government running out of money to pay its bills and, eventually,
finding it difficult to make payments on the debt itself, has economists
around the world prophesying dire consequences.
Mutual funds, which are not allowed to hold defaulted securities, may have to dump masses of U.S. treasuries.
Ratings agency Fitch fired a warning shot Tuesday
that it may downgrade the country's AAA credit rating to AA+ over the
political brinksmanship and bickering in Washington that have brought
the government to this point.
That could help raise interest rates on U.S. debt, putting the country deeper into the red.
Rating agency Standard
& Poor's cut the U.S. credit rating from AAA to AA+ after the 2011
debt ceiling crisis. Moody's still has the U.S. rated AAA.
Investors around the world appeared to be sitting on the sidelines Wednesday waiting out the day's debate.
Asian markets ended with
mixed results, European markets were down slightly Friday afternoon and
U.S. stock futures -- frequently taken as an indicator for how U.S.
markets will open -- were up marginally before trading began Wednesday.
Emergency brake?
Some scholars have suggested that the 14th Amendment to the Constitution gives Obama an emergency brake to stop the default by ignoring what Congress does and borrowing in spite of having reached the debt ceiling.
Section 4 of the amendment states:
"The validity of the public debt of the United States, authorized by
law, including debts incurred for payment of pensions and bounties for
services in suppressing insurrection or rebellion, shall not be
questioned."
Obama has rejected such claims,
the Congressional Research Service has said. And other scholars say
that by invoking the 14th Amendment in this way, the President would
risk breaking other laws.
But the same scholars who say this say they believe that section 4 was formulated to keep politicians from holding the debt hostage in order to impose their political will on the natio
Muddled plan
Disarray among House
Republicans caused confusion on Tuesday, with Boehner having to pull a
proposed agreement from the floor because conservatives found it too
weak.
The House proposal
dropped some provisions on Obamacare but prohibited federal subsidies to
the President and his administration officials as well as federal
lawmakers and their staff receiving health insurance through the
Affordable Care Act programs.
It also would have
forbidden the Treasury from taking what it calls extraordinary measures
to prevent the federal government from defaulting as cash runs low, in
effect requiring hard deadlines to extend the federal debt ceiling.
House Democrats opposed
the GOP proposal, which meant it couldn't pass without support from the
40 or so tea party conservatives, who wanted more spending cuts.
"It just kicks the can down the road another six weeks or two months," said Rep. Joe Barton, R-Texas.
House Majority Leader
Eric Cantor referred to the GOP infighting at Wednesday's caucus
meeting, telling his Republican colleagues to stop beating up on each
other, according to participants. Describing Cantor as impassioned, they
said he implored the caucus to avoid characterizing each other as good
or bad Republicans.
CNN's Ben Brumfield, Greg Botelho, Michael
Pearson, Paul Steinhauser, Ashley Killough, Craig Broffman, Jim Acosta,
Dana Bash, Deirdre Walsh, Mark Preston, Dan Merica, Brianna Keilar and
Janet DiGiacomo contributed to this report.
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