Shutdown: House vote on GOP plan delayed ahead of debt deadline (updated)

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4:02 p.m. Vote on GOP plan delayed as debt deadline nears

Time growing desperately short, House Republican efforts to avert a Treasury default and end a partial government shutdown neared collapse Tuesday night, and one of the country's top ratings firms warned of a possible downgrade in the nation's creditworthiness.

Hours after announcing the House would hold an evening vote on a GOP-crafted measure, Republican leadership aides said a private check of support was not promising and the measure might never reach the floor.

That could mark the end of what amounted to a daylong detour away from separate bipartisan negotiations in the Senate that had appeared on the verge of bearing fruit.

As the day of secret meetings and frenzied maneuvering unfolded in all corners of the Capitol, Sen. Barbara Mikulski, D-Md., stood on the Senate floor at midafternoon and declared, "We are 33 hours away from becoming a deadbeat nation, not paying its bills to its own people and other creditors."

In New York, the Fitch rating agency warned that it was reviewing the government's AAA credit rating for a possible downgrade, though no action was near. Fitch, one of the three leading U.S. credit-ratings agencies, said that "the political brinkmanship and reduced financing flexibility could increase the risk of a U.S. default."

On Wall Street, the Dow Jones industrial average fell 133 points after rising a day earlier when optimism spread that a deal might be at hand.

Under the revised bill prepared by House Republicans, the Treasury would be permitted to borrow normally until Feb. 7 and the government reopened with sufficient funds to carry it to Dec. 15.

Additionally, members of Congress, the president, vice president and thousands of aides would no longer be eligible to receive employer health care contributions from the government that employs them.

Before the bill seemed to lose steam later in the day, Michael Steel, a spokesman for Speaker John Boehner said in a statement, "The House will vote tonight to reopen the government and avoid default."

He said the legislation would "end Obamacare subsidies for elected officials and staff in Washington, D.C., and pressure Senate Democrats to accept more sensible" time frames for reopening the government and renewing Treasury's borrowing authority.

Gone from the measure was a pair of provisions that had drawn objections, one a plan to delay a medical device tax created under the new health care law known as Obamacare. The other would have imposed tougher income verification standards on individuals and families seeking subsidies for care under the law.

Democrats had viewed both as concessions to Republicans, and deemed their inclusion as a violation of Obama's vow not to pay a "ransom" to the GOP for passing essential funding and borrowing measures.

Even with the changes, it was unclear whether Boehner and the GOP leadership had the votes to pass their measure.

Heritage Action, a group with close tea party ties, announced it would oppose the measure because "it will do absolutely nothing to help Americans who are negatively impacted by Obamacare." It said it would include the vote in its determinations next year on which candidates to support in the midterm elections.

The day's events prompted an outbreak of partisan rhetoric, mixed with urgent warnings that both the U.S. and global economies could suffer severe damage quickly unless Congress acted by Thursday.

Even something of an appeal for heavenly aid was thrown in, as Rep. Steve Southerland of Florida led House Republicans in a rendition of "Amazing Grace" at the beginning of a rank-and-file meeting called to discuss a way out of the impasse.

Speaking with reporters, Boehner said, "I have made clear for months and months that the idea of default is wrong and we shouldn't get anywhere close to it."

But the first measure the leadership produced evidently came up short on votes, and the White House trashed it as an attempt to "appease a small group of tea party Republicans who forced the government shutdown in the first place. "

Democrats jumped on Boehner and the plan he produced.

In unusually personal remarks, Senate Majority Leader Harry Reid said the Ohio Republican had "once again tried to preserve his role at the expense of the country."

That was a reference to a rebellious rank and file in the House, who routinely seek to push Boehner and the rest of the leadership to the right. A group met Monday night with Texas Sen. Ted Cruz, who last summer played a public role in a campaign to demand defunding of Obamacare as the price for preventing a partial government shutdown.

The Democratic attacks were too much for some Republicans who have been among those most vocal in calling for a bipartisan solution to the impasse.

"It's piling on and it's not right," Sen. John McCain, R-Ariz., said of the response from the Democrats. "To categorically reject what the House and the speaker are doing — and I think he's pretty courageous in what he's doing — in my view is not serving the American people."

The House had been effectively sidelined in recent days as Reid and Senate Republican Leader Mitch McConnell engaged in intense negotiations to reopen the government and raise the debt limit.

That changed emphatically when details began circulating of some of the elements of the terms under discussion.

In addition to ending the shutdown and raising the debt limit, the two Senate leaders were considering a plan to delay a $63-per-person fee that the health care overhaul would impose on anyone who receives health care coverage under an employer-provided plan.

Some Republicans balked, complaining that was a concession to labor unions who are among the Democrats' most loyal political supporters.

Many unions have announced their opposition to the fee, but so, too, have businesses.

Reid and McConnell also have been discussing provisions to give federal agencies flexibility in adjusting to across-the-board spending cuts imposed under legislation that Obama signed in 2011.

Another element of their negotiations would call for House-Senate negotiations on a possible deficit reduction measure to take the place of the across-the-board cuts.

The twin crises began more than three weeks ago, when some lawmakers in the House insisted on seeking the defunding of Obamacare as the price for preventing a partial shutdown of the government.

The White House refused, and the Democratic-controlled Senate rejected legislation to achieve the GOP goal, as well as subsequent legislation that contained scaled-back concessions on the health care overhaul.

The partial shutdown, which began on Oct. 1, swiftly merged with the approaching debt crisis.

According to Treasury Secretary Jacob Lew, unless Congress acts by Oct. 17, the government will lose its ability to borrow, and would be required to meet its obligations relying only on cash on hand and incoming tax receipts.

While it was unclear how long that would suffice, the date stood as a deadline. The closer it approached, the more urgent became the pleas of businesses and bankers in this country as well as officials overseas for the United States to put its finances into order.

Whatever the outcome, the all-out assault on Obamacare that became a tea party rallying cry last summer was long gone, repulsed by the president and his Democratic allies in Congress.

Instead, Republican disapproval ratings have plummeted in public opinion polls in the past two weeks, vindicating warnings from Boehner, McConnell and other party elders that the original strategy of threatening to shut down the government in hopes of wiping out the overhaul was badly flawed.

"We got ourselves in a ditch," McCain said. "And we got to stop digging."

Beyond Washington, Fitch Ratings said it expected to conclude its review of the nation's top credit rating within six months.

Fitch said it expected the debt limit to be raised soon but added, "The political brinkmanship and reduced financing flexibility could increase the risk of a U.S. default." Fitch is one of the three leading U.S. credit ratings agencies, along with Standard & Poor's and Moody's.

Updated 2:08 p.m.: House to vote Tuesday night on budget bill

A spokesman for Speaker John Boehner says the House will vote Tuesday night on legislation that would reopen the government and avert a financial default.

Michael Steel says the bill would keep the government operating until Dec. 15 and let the Treasury borrow money until Feb. 7.

It also says members of Congress, the president, vice president and thousands of congressional aides would no longer eligible to receive employer health care contributions from the government that employs them.

There was no immediate reaction from the White House or Democrats, who had objected to an earlier version of the House GOP bill.

7:33 a.m.: House GOP to try to counter Senate debt limit plan

House GOP leaders unveiled their own plan Tuesday to counter an emerging Senate deal to reopen the government and forestall an economy-rattling default on U.S. obligations.

The House bill would repeal a new tax on medical devices and take away lawmakers' federal health care subsidies in addition to funding the government through Jan. 15 and giving Treasury the ability to borrow normally through Feb. 7.

Rep. Darrell Issa, R-Calif., said Republicans plan to pass the measure later Tuesday. It could prove tricky because Democrats probably won't support it.

The House move comes after conservative lawmakers rebelled at the outlines of an emerging Senate plan by Majority Leader Harry Reid, D-Nev., and GOP leader Mitch McConnell of Kentucky. Those two hoped to seal an agreement on Tuesday, just two days before the Treasury Department says it will run out of borrowing capacity.

The emerging Senate measure would reopen the government through Jan. 15 and permit the Treasury to borrow normally until early to mid-February, easing dual crises that have sapped confidence in the economy and taken a sledgehammer to the GOP's poll numbers.

"The general framework is there" between Reid and McConnell, said Sen. Bob Corker, R-Tenn. He said conversations with the House were continuing and he thought it would be midday Tuesday at the earliest before a plan was finalized.

President Barack Obama telephoned McConnell on Monday to talk about the emerging deal, a McConnell aide said. Congressional leaders had been scheduled to meet with Obama at the White House on Monday, but the meeting was postponed to allow more time for negotiations.

On Wall Street, futures were mixed early Tuesday, with investors somewhat optimistic over a potential deal.

Sen. Mark Pryor, an Arkansas Democrat who was part of the bipartisan group known as the Gang of 12 which labored over the weekend to end the stalemate, said Tuesday he was "pretty confident" the Senate leadership and the White House would announce an agreement some time later in the day.

Speaking of the House, Pryor told CNN that "some Republicans are, quite honestly, they're acting childish about this. They almost want a shutdown. They almost want to see us break the debt ceiling."

Sen. Amy Klobuchar, D-Minn., also a part of the Gang of 12, told "CBS This Morning" she believes an agreement is near that "doesn't contain a lot of the partisan pills" that sank earlier proposals. She said it's urgent that national leaders find solutions to vexing issues so that the country doesn't "lurch from one financial crisis to another."

Many House conservatives were unhappy about the emerging framework, though it remained to be seen whether they would seek to change it.

"One of the things we want to test is just basic fairness," Rep. Steve Scalise of Louisiana, chairman of the Republican Study Committee, an influential group of House conservatives, said on CNN Tuesday. He was asked how conservatives would respond to the plan taking shape in the Senate. "One of the things we don't want to see is just another patch," he said.

"We're willing to get the government open. We want to get the government open," Scalise said. "Hopefully they get something done that addresses the spending issue."

The developing plan is a far cry from the assault on "Obamacare" that tea party Republicans originally demanded as a condition for a short-term funding bill to keep the government fully operational. It lacks the budget cuts demanded by Republicans in exchange for increasing the government's $16.7 trillion borrowing cap.

Nor does the framework contain any of a secondary set of House GOP demands, like a one-year delay in the health law's mandate that individuals buy insurance. Instead, it appeared likely to tighten income verification requirements for individuals who qualify for Obamacare subsidies and may repeal a $63 fee that companies must pay for each person they cover under the big health care overhaul beginning in 2014.

Democratic and Republican aides described the outlines of the potential agreement on condition of anonymity because the discussions were ongoing.

But with GOP poll numbers plummeting and the country growing weary of a shutdown entering its third week, Senate Republicans in particular were eager to end the shutdown — and avoid an even greater crisis if the government were to default later this month.

Any legislation backed by both Reid and McConnell can be expected to sail through the Senate, though any individual senators could delay it.

But it's another story in the House, where it wasn't winning a lot of fans among conservatives.

Rep. Joe Barton, R-Texas, signaled that conservative members of the House were deeply skeptical. He said any bill had to have serious spending cuts for him to vote to raise the debt ceiling and said he thought Obama and Treasury Secretary Jack Lew had more flexibility than they had said publicly.

"No deal is better than a bad deal," Barton said.

Asked whether the emerging package contained any victories for Republicans, Rep. James Lankford, R-Okla., a member of the House GOP leadership, said, "Not that I've seen so far, no."

In addition to approving legislation to fund the government until late this year and avert a possible debt crisis later this week or month, the potential pact would set up broader budget negotiations between the GOP-controlled House and Democratic-led Senate. One goal of those talks would be to ease automatic spending cuts that began in March and could deepen in January, when about $20 billion in further cuts are set to slam the Pentagon.

Democrats were standing against a GOP-backed proposal to suspend a medical device tax that was enacted as part of the health care law.

Democrats also were seeking to preserve the Treasury Department's ability to use extraordinary accounting measures to buy additional time after the government reaches any extended debt ceiling. Such measures have permitted Treasury to avert a default for almost five months since the government officially hit the debt limit in mid-May, but wouldn't buy anywhere near that kind of time next year, experts said.

The House GOP plan would repeal the extraordinary measures, which would make the Feb 7 date a hard deadline to revisit the fight.

Some lawmakers are frustrated that defusing the immediate standoff simply sets up another fight next year.

"It's punting because no one, Democrats, Republicans wants to face up — and the American people — to the tough reality that we're in," said Sen. Richard Shelby, R-Ala. "It's all a temporary fix."

Associated Press writers Donna Cassata, David Espo, Henry C. Jackson and Alan Fram contributed to this report.

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