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GOP weighs short-term debt-limit hike

By David Espo
Associated Press

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WASHINGTON: House Republican leaders are considering a short-term increase in the U.S. debt limit as a possible way to break out of the gridlock that threatens the nation with an unprecedented default in as little as a week, officials said Wednesday night.

There now is far less urgency on Capitol Hill about ending the government shutdown, which heads into its 10th day today. It has caused inconvenience and financial concern for many individual Americans but appears not to threaten the widespread economic damage a default might bring.

The officials declined to say what conditions, if any, might be attached to legislation to raise the $16.7 trillion debt limit for an undetermined period, perhaps a few weeks or months. The GOP rank and file are expected to meet and discuss the issue today, before a delegation led by Speaker John Boehner, R-West Chester, goes to the White House to meet with President Barack Obama.

Obama has said he won’t agree to sign a debt-limit increase if conditions are attached. Republicans are demanding as yet-unspecified concessions to reduce deficits or make changes in the nation’s 3-year-old health-care law.

At the same time, the House has voted to create a 20-member group of lawmakers from the House and Senate to negotiate over those and other issues — a bill that made no mention of the debt limit.

The officials describing the developments Wednesday spoke only on condition of anonymity, saying they were not authorized to disclose details of private deliberations.

The disclosure came as Obama met at the White House in late afternoon for more than an hour with House Democrats. He told them that while he would prefer legislation extending the Treasury’s borrowing ability beyond the next election, he would also sign a shorter-term bill.

In addition to leadership conversations, a group of House conservatives met privately during the day for what several officials described as a wide-ranging discussion on the debt limit and the threat — or lack of it — posed by default.

No consensus was reached, but among those who spoke was Rep. Paul Ryan, R-Wis., the 2012 GOP vice presidential candidate who is chairman of the House Budget Committee and a prominent deficit hawk. In an op-ed article published during the day in the Wall Street Journal, he wrote, “We need to pay our bills today — and make sure we can pay our bills tomorrow. So let’s negotiate an agreement to make modest reforms to entitlement programs and the tax code.”

Raising the cost of Medicare for better-off beneficiaries and making changes to the tax code are perennials in budget negotiations, and precisely the type of item Obama says he is willing to discuss — but only after the government is open and the debt limit raised.

The private conversations stood in contrast to political maneuvering that characterized the day at the Capitol.

Death benefits to continue

Its approval ratings scraping bottom, Congress took no discernible steps to end the nine-day partial government shutdown or to head off threatened default. Instead, the House passed legislation that the Obama administration already had rendered unnecessary — on providing death benefits to families of military forces who die.

Pentagon officials said they would contract with a charity group, the Fisher House Foundation, to restore death benefits to families of service members killed in action, including a $100,000 payment, that have been stopped by the government shutdown. The officials said the Pentagon would reimburse the group after the shutdown ended.

But just before the Pentagon’s announcement, the House voted unanimously to restore the benefits, a swift action reflecting the public outrage about this particular effect of the shutdown. On Wednesday, the remains of four soldiers killed over the weekend in Afghanistan were returned to families who had been initially told that the government could not pay for their death benefits or their funerals.

The Senate will not take up the House bill now that the Defense Department has acted.

Boehner, Pelosi meet

Boehner and Democratic leader Nancy Pelosi met face to face — and promptly disagreed even about which side had requested the get-together.

Across the Capitol, the Senate marked time under 18th century rules, focusing its attention on a test vote — next weekend — on a $1 trillion increase in the debt limit to avert a default.

“Enough is enough,” said Barry Black, the Senate chaplain who has delivered a series of pointed sermonettes in recent days as lawmakers careen from crisis to crisis.

Evidently not.

With Treasury Secretary Jacob Lew on tap to testify before lawmakers on Thursday, officials said he was expected to reiterate that Congress needed to raise the government’s borrowing limit by Oct. 17 to be sure of preventing default.

Despite warnings from leaders of both political parties that a financial default could plunge the economy into recession, cause interest rates to rise and home values to plummet, one Republican lawmaker, Rep. Mo Brooks of Ala., said a default wouldn’t be the worst calamity to befall the country.

“Insolvency and bankruptcy” would be worse, he said, warning that that would be the result of yet another increase in the debt limit without attaching measures to bring down the federal budget deficit.

The nation’s largest manager of money market mutual funds was taking no chances. It said it had been selling off government debt holdings over the past couple of weeks and no longer held any that would come due around the time the nation could hit its borrowing limit. Fidelity Investments expects Congress to take the necessary steps to avoid default, but “we have to take precautionary measures,” said Nancy Prior, president of Fidelity’s Money Market Group.

The New York Times contributed to this report.


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