It hasn’t been announced, and you won’t hear about it today, but the final volley of the fiscal impasse, at least for House Republicans, is already being brokered. And according to my top sources — both members and senior aides — it won’t end with a clean CR, or with a sprawling, 2011-style budget agreement. It’ll end with an offer — a relatively modest mid-October offer that concurrently connects a debt-limit extension, government funding, and a small, but strategically designed menu of conservative demands.


At least that was the word late Thursday, when the leadership and groups of Republicans huddled. There is a growing acceptance, especially among the leading players, that the debt-limit talks will soon blend into the shutdown talks and force Republicans to negotiate a delicate peace that can win the support of a majority of the conference (or close to it), as well as a smattering of Democrats. To that end, recent quiet, freewheeling discussions — some hosted by the leadership, others by Paul Ryan — aren’t so much about whipping toward such a deal, but about deciding how to frame it.

So far, it has been an uneasy process, but not futile. Many of the GOP’s more centrist members are asking Boehner and Ryan to not put too much on the table, or else risk turning off Democrats and extending the shutdown. On Wednesday afternoon, during a series of meetings in Boehner’s office, they pressed the speaker to avert a default on the nation’s debt. But Boehner, though with them in spirit on averting default, told his colleagues to hang tight for the moment and swallow hard as the shutdown continues. One Boehner ally tells me the speaker first has to balance his various conservative blocs before he can even privately articulate a final pitch.


But details are floating to the surface as the leadership reaches out to internal power brokers about what’s within the realm of the possible. What I’m hearing: There will be a “mechanism” for revenue-neutral tax reform, ushered by Ryan and Michigan’s Dave Camp, that will encourage deeper congressional talks in the coming year. There will be entitlement-reform proposals, most likely chained CPI and means testing Medicare; there will also be some health-care provisions, such as a repeal of the medical-device tax, which has bipartisan support in both chambers. Boehner, sources say, is expected to go as far as he can with his offer. Anything too small will earn conservative ire; anything too big will turn off Democrats.

Another tidbit: One House Republican familiar with the talks says parts of sequestration may be something Republicans will discuss, should Democrats inch toward them on taxes or health care. For example, if Democrats start to talk about chained CPI, Republicans may budge a little on sequestration and look at trading some entitlement reform for renewed funding. Senate budget chairman Patty Murray and Ryan have been having related talks for months, and they’re poised to guide the negotiations, should they pick up speed. House leadership, per several sources, seems open to such trades.



House leaders are also looking at how to include some energy demands, such as the Keystone pipeline, but tax reform and entitlements are looking to be the core of the offer, and the medical-device tax is seen as the rare health-care demand that’s viable as part of a deal. Repealing the Independent Payment Advisory Board, for example, may be part of any initial offer, just to make the Republican position clear, but it’s not seen by House insiders as something that has much traction in the Senate, or as something that President Obama would support, even under pressure. The goal, it seems, isn’t to cut a big deal that includes revenue concessions, which Boehner knows would face criticism in his conference, but a guidance for tax reform and a group of items he knows will pass conservative muster.

What’ll be tricky is how Boehner proceeds and how the offer will be brought to the floor. The leadership first thought about passing a debt-limit bill that included its wish list, and they may still do that as a first step. But now they’re looking at bringing things to the floor in succession as the debt limit nears—the demands may not be tied into one bill, but into a process that will try to bait Senate Democrats into at least considering the policies. It may be all part of a flurry of activity and votes between the chambers as the clock ticks, instead of trying to whip Republicans behind a single plan.


The key for Boehner is to pass a CR and debt-limit extension, but to do it in a way that shows real progress to the right on certain fronts — a medical-device tax repeal is at the top of the list — and moves toward major future changes, such as tax reform, without having to do too much in the short term. Ryan’s role is important because he will argue behind closed doors that instructions for tax reform will give the GOP, later this year and in 2014, its best chance for a larger budget agreement within divided government for the foreseeable future, and if conservatives don’t back it, they’d be killing tax reform. There is a real push within the leadership and within Ryan’s camp to make sure the party is seen as not just the anti-Obamacare party, but a party with conservative ideas, and Boehner is expected to reflect that perspective.

Things remain fluid, though. Days ago, when things began to bubble up about Boehner’s decision to move toward a larger fiscal package, many House Republicans, even his close friends, thought he was maybe trying for a “grand bargain” — a broad deal that’d include some revenue and tax reform, among other policy fixes. But after Boehner brought that kind of deal up at the White House earlier this week, and Democratic leaders dismissed it, he appears to have retreated slightly — looking to go big, but not grand.