Republicans consider short-term U.S. debt ceiling increase

Reuters

* House leaders weighing debt ceiling idea but decisionuncertain

* Republicans play down their demands on healthcare law

By David Lawder and Richard Cowan

WASHINGTON, Oct 9 (Reuters) - U.S. House of RepresentativesRepublicans are considering signing on to a short-term increasein the government's borrowing authority to buy time fornegotiations on broader policy measures, according to aRepublican leadership aide.

How long the increase might suffice - a few weeks or a fewmonths - was unclear. But agreement by Republicans and Democratsto raise the debt ceiling would at least stave off a possibledefault after Oct. 17, when Treasury Secretary Jack Lew hasdetermined the government will no longer be able to borrow.

President Barack Obama has said he would accept a debtceiling increase of limited duration as long as no strings wereattached, except perhaps a non-binding agreement to discusspolicy issues.

It was unclear Wednesday night how far Republicans might beprepared to go to meet Obama's conditions. Republicans in theHouse have been demanding a variety of conditions - includingchanges to Obama's healthcare law - in return for cooperating onthe debt ceiling and on a funding measure that might reopen thegovernment, which has been partially shut down since Oct. 1.

In recent days, however, Republican emphasis has shiftedmore toward deficit reduction measures and less to Obamacare,the health care law.

Republicans in particular and Congress in general have takena public beating in the showdown, with an Associated Press-Gfksurvey on Wednesday showing Congress as a whole at a rock-bottom5 percent approval rating. More than six of every 10 Americansblamed Republicans for the impasse.

Republican leaders plan to make remarks to reporters onThursday at 11 a.m. (1500 GMT) but it was uncertain whether theywould be prepared to unveil anything concrete then. The party'sleadership has proven unable to control rebellious conservativesin the House, who have sufficient power to squelch any deal theydislike.

FIRST FACE-TO-FACE TALKS

With pressure rising and no clear path forward for breakingtheir fiscal impasse, Obama launched a series of White Housemeetings with lawmakers on Wednesday to search for a way to enda government shutdown and raise the debt limit.

House Democrats journeyed to the White House to discuss thefiscal stalemate, and Senate Democrats and Republican leaders inthe House of Representatives will make separate treks onThursday amid rising worries about the potential for economichavoc in the crisis.

The depth of the dispute was evident, however, in thefailure of Obama and House Speaker John Boehner to even agree ona guest list for their Thursday session.

The White House invited all House Republicans, but Boehnerlimited the visitors to 18 party leaders and prominent committeechairs, lessening Obama's exposure to Republicans who mightdissent from the leadership's hard-line strategy and torank-and-file Tea Party members who inspired it.

White House spokesman Jay Carney said Obama was"disappointed" at the truncated guest list because "thepresident thought it was important to talk directly with themembers who forced this economic crisis on the country."

The impasse has shut the government for nine days andrattled financial markets with the threat that the country's$16.7 trillion borrowing limit will not be raised before theOct. 17 deadline.

Republican Tea Party fiscal conservatives precipitated thecrisis by demanding that Obama's healthcare reform law bedelayed or curtailed in exchange for approving the funding ofgovernment operations and raising the debt ceiling.

But in a shift some Republicans hope will strengthen theirhand in the fight, the party's House leaders have played downdemands to weaken the healthcare law and focused instead oncalls to rein in deficits.

House Majority Leader Eric Cantor and Paul Ryan, the HouseBudget Committee chairman and former vice presidentialcandidate, both published opinion pieces focused on tacklinglong-term debt and deficits instead of the healthcare law.

The White House meeting with House Republicans will be thefirst face-to-face talks between Obama and his politicaladversaries since last week, although lawmakers have informallybeen exploring possible compromises and ways to resolve thestalemate.

Republican senators on Wednesday were considering a proposalby Senator Susan Collins of Maine that would reopen thegovernment and increase the borrowing authority while repealingan unpopular medical device tax designed to finance subsidiesunder the healthcare law.

Collins' plan also would give federal agencies flexibilityin dealing with across-the-board spending cuts that kicked inearlier this year and are opposed by many members of Congress.

After a meeting of Republican senators, John McCain ofArizona called her initiative "a pretty good proposal that someof us like," and a Senate Republican aide said there arediscussions about possibly incorporating a short-term debt limitincrease into the measure.

"We continue to talk. No progress, but there never is untilyou reach a breakthrough," McCain told reporters "I'm not sayingthat we will ever reach a breakthrough. I'm saying conversationsare going on. I hope that they reach some conclusion. I'm notsure whether they will or not."

'THEY'RE NOT GETTING ANYTHING'

All 200 House Democrats were invited to the afternoonsession at the White House, and Democratic leaders said mostmade the trek. They said Obama was resolute about notnegotiating with Republicans until they drop their demands.

Democratic House Leader Nancy Pelosi said House Democratshad not seen a short-term proposal for funding the governmentand lifting the debt ceiling from Republicans and would not makeany concessions to get one.

"The debt ceiling needs to be lifted. They're not gettinganything for that. And we haven't seen an offer on that," shesaid.

Obama scolded Republicans on Tuesday for demandingnegotiations, but said he would talk about anything includingthe healthcare law if Republicans re-opened the government andlifted the debt ceiling even for the short term.

Boehner rejected Obama's demands as "unconditionalsurrender," but other Republicans have showed a willingness toconsider a short-term deal if there was a framework in place fornegotiations.

Those hopes were fueled by the opinion columns on Wednesday,particularly Ryan's column urging a negotiated end to thestalemate but did not mention Republican demands for linkingchanges in the federal healthcare law with government funding.

"I am beginning, by the way, to be a little hopefulregarding our current situation. It looks like the House isbeginning to focus on the right things," Republican Senator BobCorker of Tennessee said on CNBC, pointing to Ryan's column.

But Boehner took to the House floor on Wednesday toreiterate Republican demands that the healthcare law be part ofthe broader discussions.

"Our message in the House has been pretty clear. We want toreopen our government and provide fairness to all Americansunder the president's healthcare law," Boehner said.

World Bank President Jim Yong Kim added his voice to achorus of experts warning about the impact of the stalemate,saying on Wednesday that even the threat of a U.S. default couldhurt emerging markets and the world's most vulnerable people.

"We're very concerned. Because right now there's so manyheadwinds as it is for emerging markets and the developingworld, that kind of impact really could be devastating," Kimtold CNN.

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