WASHINGTON — President Barack Obama opened talks with House Republicans on Thursday about their plan to lift the federal debt limit through Thanksgiving, raising hopes that Washington would avert its first default on the national debt.
But after a 90-minute meeting at the White House, the two sides remained at odds over how and when to end the government shutdown — now in its 11th day — with Obama insisting that Republicans reopen federal agencies before negotiations over broader budget issues can begin.
In the Senate, top Republicans began crafting a proposal that would reopen the government and raise the federal debt limit for as long as three months — an approach closer to the terms Obama has set to end the standoff.
The package was being assembled by Sen. Susan Collins, R-Maine, who said she is also in talks with Senate Democrats.
“I was surprised that the House decided to deal only with the debt limit and not with the continued closure of government,” Collins said. “I think that we have to deal with both issues and we need to do so quickly.”
The developments meant that bipartisan negotiations were suddenly underway on two separate tracks Thursday after weeks of stalemate. Major questions remain, however, about the path ahead.
Both sides described Obama’s evening session with House Republicans as a “good meeting,” and said talks will continue. “The president’s goal remains to ensure we pay the bills we’ve incurred, reopen the government and get back to the business of growing the economy,” the White House said in a statement.
House Speaker John Boehner, R-Ohio, left the session and returned to the Capitol without speaking to reporters. Majority Leader Eric Cantor, R-Va., said the meeting was “clarifying,” even though it did not produce a resolution.
“He didn’t say yes. He didn’t say no,” said House Budget Committee Chairman Paul Ryan, R-Wis. “We’re continuing to negotiate this evening.”
White House officials were careful not to characterize the meeting as a negotiation, after the president spent weeks publicly and privately declaring that he would not negotiate over lifting the debt ceiling. According to a Democrat familiar with the meeting, Obama told the speaker to come back with proposals for reopening the government but reiterated that he would not make policy concessions.
Republicans, however, did describe the process as a negotiation. The 20 House Republicans — Boehner declined the offer to bring all 232 GOP lawmakers to the White House — gathered in the Roosevelt Room with Obama, Vice President Joe Biden, Treasury Secretary Jack Lew and other senior officials.
A similar huddle is slated for late Friday morning when Obama will host Senate Minority Leader Mitch McConnell, R-Ky., and the Senate Republican Conference. McConnell and Biden have been largely on the sidelines the past few weeks despite having served as the closers for the past three large fiscal compromises.
With the nation set to run out of money to pay its bills on Oct. 17, the stock market soared Thursday on signs that an end to the impasse may be at hand. The Dow Jones industrial average shot up more than 300 points to close at 15,126, recovering most of the value it had lost since the shutdown began Oct. 1. The Nasdaq and Standard & Poor’s 500 Index also rose more than 2 percent.
The House proposal that emerged Thursday would push off the threat of default until Nov. 22, but it would not end the shutdown, an idea that fell flat in the Senate with members of both parties. For the first time since the brinkmanship began in early September, McConnell waded into the fray, holding meetings with his rank-and-file members to develop a competing Senate proposal.
Senate Democrats were intrigued by Collins’ proposal but unhappy with its demand for Democratic concessions. Those would include the repeal of a tax on medical devices that helps fund Obama’s health-care law, the Affordable Care Act, and new income-verification procedures for people who receive tax subsidies to buy health insurance on the law’s new exchanges.
In addition, Collins’ proposal would maintain deep cuts known as sequestration through at least March, although it would grant agencies greater flexibility to decide where the cuts would fall. Sequestration remains a red flag for the White House and many Democrats, who want to restore funding for domestic programs.
Senior Democrats involved in the talks declined to comment, saying the discussion had reached a sensitive stage.
The Senate, meanwhile, is on track to vote Saturday on a separate Democratic proposal that would suspend enforcement of the debt limit through 2014. It was unclear late Thursday whether that measure would proceed, or whether it would be replaced if an agreement with Republicans emerged.
Even if such a deal advanced in the Senate, it could face rough sledding in the House, where a contingent of Republicans remains committed to using the shutdown to undermine the health-care law, frequently called “Obamacare” by critics.
Boehner’s offer to temporarily lift the debt limit but keep the government shuttered was engineered in part to satisfy far-right conservatives, who first suggested using the threat of a shutdown to strip funding for the law.
On Thursday, many creators of that strategy — including Sens. Ted Cruz, R-Texas, and Mike Lee, R-Utah — voiced support for Boehner’s latest gambit.
“It’s to continue [the] fight on Obamacare, to not leave that as a side issue,” said Rep. Raul Labrador, R-Idaho.
Heritage Action for America, a conservative advocacy group influential with tea party Republicans, said it will not ask lawmakers to vote against raising the debt limit with no strings attached in order to refocus attention on the health-care law. The conservative Club for Growth also announced that it will look the other way on the debt limit vote.
The conservative Madison Project issued a broadside against McConnell, who faces a tough re-election campaign in 2014 and has stayed mainly on the sidelines until now.
“After remaining largely silent when conservatives were fighting Obamacare, Senator Mitch McConnell is, once again, re-emerging from the shadows to sell out conservatives in the eleventh hour,” the project’s Drew Ryun said in a statement.
GOP leaders, meanwhile, appear increasingly eager to extract the party from the health-care fight, which has not only failed to achieve its goals but also has decimated the party’s reputation among voters. According to a Wall Street Journal/NBC News survey released Thursday, 24 percent of voters have a positive view of the GOP — an all-time low in 24 years of polling.
After briefing rank-and-file lawmakers on the details of the latest strategy in a closed-door meeting Thursday morning, Boehner told reporters that the goal was to offer the president “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.”
Asked which problems he hoped to address in that conversation, Boehner did not mention the health-care law or any other specific issue, saying only, “I don’t want to put anything on the table, I don’t want to take anything off the table.”
Since the shutdown began, senior Republicans have sought to shift the debate away from the Affordable Care Act and toward goals such as overhauling the tax code and replacing sequestration with cuts to entitlement programs, including Social Security and Medicare.
“If you’re in a global negotiation over the entire budget, then [the health-care law] is part of the negotiation. But it’s probably not the only part and may not even be the central part,” said Rep. Tom Cole, R-Okla.
The latest House GOP plan calls for suspending the debt limit until Nov. 22, the Friday before Thanksgiving. It would forbid Lew from using “extraordinary measures” to conserve cash, creating a firm deadline when Treasury would be forced to rely solely on incoming revenue to pay bills.
Before holding a vote on that plan, House leaders want Obama to agree to enter budget negotiations. Only then would they talk about reopening the government — and they declined to say what concessions they would demand for funding federal agencies.
Obama has indicated that he could support a short-term debt-limit increase, but he has also demanded that Republicans allow the government to reopen before he would negotiate.
White House press secretary Jay Carney told reporters Thursday that “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.” However, Carney said, “it would be far better for the economy if we stopped this episodic brinksmanship and . . . mothballed the nuclear weapon here, which is the threat of default, for a longer duration.”