Dodge default, defund Obamacare, GOP leaders say

WASHINGTON (AP) — House Republicans vowed Wednesday to pass legislation that would prevent a partial government shutdown and avoid a historic national default while simultaneously canceling out President Barack Obama’s health care overhaul, inaugurating a new round of political brinkmanship as critical deadlines approach.

Obama swiftly condemned the effort as attempted political extortion, and the Republican-friendly Chamber of Commerce pointedly called on lawmakers to pass urgent spending and borrowing legislation — unencumbered by debate over “Obamacare.”

The two-step strategy announced by House Speaker John Boehner marked a concession to his confrontational rank and file. At the same time, it represented a challenge to conservatives inside the Senate and out who have spent the summer seeking the votes needed to pull the president’s cherished health care law out by its roots. They now will be called on to deliver.

“The fight over here has been won. The House has voted 40 times to defund, change Obamacare, to repeal it. It’s time for the Senate to have this fight,” said Boehner, an Ohio Republican.

As outlined by several officials, Boehner and the leadership intend to set a House vote for Friday on legislation to fund the government through Dec. 15 at existing levels while permanently defunding the health care law. The same bill will include a requirement for Treasury to give priority to Social Security and disability payments in the event the government reaches its borrowing limit and cannot pay all of its obligations.

A second measure, to be brought to the floor as early as next week, would allow Treasury to borrow freely for one year.

That same bill is also expected to be loaded with other requirements, including the construction of the Keystone XL Pipeline from Canada to the United States, a project that environmentalists oppose and that the Obama administration has so far refused to approve. Other elements will reflect different Republican budget priorities, including as-yet-undisclosed savings from health care and government benefit programs and steps to speed work on an overhaul of the tax code.

Prospects for passage of the two bills are high in the House, where Republicans have a majority and leaders pronounced the rank and file united behind the strategy.

But both measures are certain to be viewed as non-starters by majority Democrats in the Senate.

Some Republicans appeared to concede during the day that the legislation that eventually reaches the White House will leave the health care law in effect.

“I don’t think that any reasonable person thinks there’s anything to be gained by a government shutdown,” said Sen. John Cornyn, R-Texas. “Rather than a shutdown of government, what we need is a Republican victory in 2014 so we can be in control. I’m not sure those are mutually compatible.”

But a fellow Texas Republican, Sen. Ted Cruz said it was important to hold fast. He said Democrats appear at present to have the votes to restore funds for the health care law, adding, “At that point, House Republicans must stand firm, hold their ground and continue to listen to the American people.”

Given the differences, it is unclear how long it will take Congress and the White House to clear the measures, and how close the government will come to a partial shutdown or a market-rattling default over the next three weeks.

Separately, Federal Reserve Chairman Ben Bernanke said it was time to settle the fight over raising the ceiling on government borrowing.

“This is one of the risks we are looking at,” Bernanke said at a news conference, expressing concern that a lingering battle between Congress and the White House over the debt limit — and default — could slow the national economy.

At the White House, the administration’s budget director, Sylvia Burwell, issued a memo to department heads that said, “Prudent management requires that agencies be prepared for the possibility of a lapse” in funding.

Congressional Democrats competed to denounce the Republican move in the strongest possible terms. Sen. Chuck Schumer of New York said the GOP was pursuing an “insane plan.” Sen. Amy Klobuchar of Minnesota said, “A group of extremists is threatening to hold our government hostage.”

Obama, speaking to CEOs at a meeting of the Business Roundtable, said, “You have never seen in the history of the United States the debt ceiling or the threat of not raising the debt ceiling being used to extort a president or a governing party and trying to force issues that have nothing to do with the budget and have nothing to do with the debt.”

He attributed the effort to a “small faction” within the Republican Party.

R. Bruce Josten, executive vice president of the Chamber of Commerce for government affairs, urged the House in a letter to “act promptly to pass a (bill) to fund the government and to raise the debt ceiling,” and then to return to health care, tax reform and other issues.

Whatever its ultimate impact on Republican lawmakers, the letter stands as a counter to an aggressive campaign by tea party-aligned groups including the Senate Conservatives Fund, Heritage Action and the Club for Growth in recent weeks to generate support for legislation to defund the administration’s health care overhaul.

Also on Wednesday, a large group of House conservatives proposed the Republicans’ first comprehensive alternative to the health care overhaul. It would provide expanded tax breaks for consumers who purchase their own insurance and increase government funding for high-risk insurance pools.

Under that proposal by the Republican Study Committee, people who buy coverage approved for sale in their states could claim a deduction of $7,500 against their income and payroll taxes, regardless of the cost of the insurance. Families could deduct $20,000. The RSC claims a membership of 175 members, about three-quarters of the House Republican rank and file.

The bill’s introduction comes at a time when party leaders have yet to advance any comprehensive alternative to the law Obama signed in 2010, though the GOP House has voted repeatedly to repeal all or part of it. The GOP pledged three years ago to “repeal and replace” the existing law, a promise Obama often notes with disdain.

The approach outlined Wednesday by Boehner and the GOP leadership team underscored how quickly tea party lawmakers have shifted their principal focus in the weeks since Cruz and Sen. Mike Lee of Utah as well as the outside groups began stressing the issue in TV ads.

The leadership’s initial proposal for avoiding a partial government shutdown was to couple funding for federal programs with a requirement for the Senate to cast a vote on defunding the health care program, a requirement that could easily have been evaded.

Conservatives quickly rebelled against that approach, forcing Boehner and his lieutenants to regroup.

Even as they did, they sought to emphasize their commitment to cutting federal spending and curtailing the debt, two issues that have consistently united the fractious rank and file since Republicans took control of the House nearly three years ago.

“Not since the Korean War has the federal government reduced spending two years in a row. We aim to make that happen,” said the Republican majority leader, Rep. Eric Cantor of Virginia.

Spending would be set at $986.3 billion for the fiscal year that begins Oct. 1, although that would be further reduced in January by a new round of across-the-board sequester cuts that would trim the level to $967 billion.

“There should be no conversation about shutting the government down. That’s not the goal here,” Boehner said.

Republicans paid a heavy political price two decades ago as the result of twin government shutdowns, at a time then-Speaker Newt Gingrich was insisting President Bill Clinton agree to cuts in Medicare, Medicaid and other popular programs.

Nor are Republicans eager to shoulder the blame for any market-shaking government default, which would probably occur if the Treasury could not continue to borrow funds to pay debts already incurred. Treasury Secretary Jack Lew has estimated that without action by Congress, that default will arrive in mid-October.