The fiscal impasse is showing no signs of ending. House pulls back on Boehner plan

Everyone is asking the same question: What’s next?

For the second time this fall, Speaker John Boehner has had to pull legislation to lift the debt ceiling because of concerns from conservative lawmakers that their leadership was heading down the wrong path.


But this time, the economy could be on the brink of disaster. The United States runs out of borrowing authority on Thursday, and it does not appear at the moment that House Republicans are willing — or able — to lift the nation’s debt ceiling.

“We need to be prepared tomorrow to make some decisions,” said House Rules Committee Chairman Pete Sessions of Texas.

( PHOTOS: Debt ceiling fight: 20 great quotes)

In practical terms, Boehner (R-Ohio), Majority Leader Eric Cantor (R-Va.) and Majority Whip Kevin McCarthy’s inability to persuade 217 lawmakers to vote for their proposal means that the House could be sidelined in a fiscal fight they picked. Action could be rapidly kicked over to Senate Majority Leader Harry Reid (D-Nev.) and Minority Leader Mitch McConnell (R-Ky.).

The fiscal impasse, which has dragged on in Washington since Oct. 1, is showing no signs of ending.

In fact, it’s about to get worse. The U.S. government is set to exhaust its borrowing authority on Thursday. Fitch Ratings put the United States AAA rating on a “negative watch,” meaning market watchers are nervous about the world’s largest economy meeting its fiscal obligations. Banks are already warning investors to get out of short-term U.S. debt, traditionally the safest investment vehicle in the world. And financial services firms are dumping hundreds of billions of dollars in Treasury bills.

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The bill that was pulled because of flagging support would have reopened the government until Dec. 15, lifted the debt ceiling until Feb. 7 and force everyone from the president to Capitol Hill staffers to pay more for their health insurance.

House Democrats said they would’ve voted nearly unanimously against this plan. That means Boehner, Cantor and McCarthy (R-Calif.) would’ve had to find 217 GOP votes to pass their bill on their own.

Conservatives immediately rebelled inside and outside the building. Outside conservative groups like FreedomWorks and Heritage Action for America urged lawmakers to vote against the bill, while their allies inside the building communicated to their leadership that they couldn’t stand with them this time around.

Even this legislation represented a drastic reversal for the House Republicans Conference, which once tried to force President Barack Obama and Democrats to agree to trillions of dollars in spending cuts as a price for raising the nation’s borrowing limit. This latest House GOP bill, offered just two days before a potentially catastrophic default by the U.S. government on its $16.7 trillion debt, contains virtually no spending cuts.

The Tuesday evening drama is ironic because Boehner, Cantor and McCarthy spent all day changing the bill to maximize Republican support in what amounted to a roller-coaster day, and another prime example of House Republicans not being able to settle on a plan.

On Tuesday morning, Republicans were going to move a bill that delayed for two years a tax on medical devices, forced the government to verify the income of those receiving Obamacare subsidies and cut health-insurance subsidies for lawmakers, their aides, the president, vice president and the Cabinet. That was quickly refashioned.

Republicans dropped the medical device tax repeal because conservatives thought it was a corporate giveaway and muddled the party’s message. Earlier Tuesday, a senior GOP aide was touting it as a common-sense change that the White House and Democratic Senate should accept. They have also dropped a provision that would’ve required the Department of Health and Human Services to verify the income of individuals who receive subsidies under Obamacare.

They changed the expiration of government funding to mid-December because they want to fight again on Obamacare before the individual mandate goes into effect Jan. 1.

The House and Senate bill ended up being studies in contrast. The Senate bill had income verification for Obamacare subsidies, created a budget negotiating committee and tentatively canceled a tax on insurance plans. The House ended up including none of those provisions.

House leadership had no choice but to sow this chaos. The opposition to the Senate’s bill was stiff. In the House Republican Conference meeting Tuesday, leadership put up a slide that read “Senate Jam.” At the beginning of the meeting, Republicans sang “Amazing Grace,” according to sources present.

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