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Congress sees signs of hope in ending shutdown

Congress sees signs of hope in ending shutdown

SHUTDOWN SHOWDOWN: U.S. Senate Majority Leader Harry Reid (D-NV) gathers with other Democratic Party senate members on the steps of the U.S. Capitol in Washington, Oct. 9, 2013. Photo: Reuters/REUTERS/Jason Reed

By David Lawder and Susan Heavey

WASHINGTON (Reuters) – Republicans and Democrats in Congress saw signs of hope on Wednesday for a break in their fiscal impasse, as members of both parties floated the possibility of a short-term increase in the debt limit to allow time for broader negotiations on the budget.

The slight shift in tone was aided by a column by House Budget Committee Chairman Paul Ryan of Wisconsin, who urged a negotiated end to the stalemate but did not mention Republican demands for linking changes in the federal healthcare law with government funding.

“Right now, we need to find common ground,” Ryan, the party’s 2012 vice presidential nominee who had been largely silent in the confrontation, wrote in the Wall Street Journal.

“We need to open the federal government. 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,” he said.

President Barack Obama scolded Republicans on Tuesday for threatening economic chaos, but said he would talk about anything including the healthcare law if Republicans re-opened the government and lifted the debt ceiling even for the short term.

House of Representatives Speaker John Boehner rejected that idea as “unconditional surrender,” but other Republicans have showed a willingness to consider a short-term deal if there was a framework in place for negotiations.

“I am beginning, by the way, to be a little hopeful regarding our current situation. It looks like the House is beginning to focus on the right things,” Republican Senator Bob Corker of Tennessee said on CNBC, pointing to Ryan’s column.

“We’re beginning to talk about the right kinds of things here. We’re beginning to now move in the right direction,” Corker said, but he warned: “Around the 13th of this month sometime, things are going to get very volatile if we’re not closer to a deal.”

Chris Van Hollen, the ranking Democrat on the House Budget Committee, said he saw rays of hope in the stalemate.

“There could be a little glimmer here. I think we’re on a very risky trajectory right now, but I think there is a possible opening here. But, again, it depends on if Republicans on the Hill are willing to jump on it,” he said on CNBC.

The impasse has shut the government for nine days and rattled markets with the threat that the country’s $16.7 trillion borrowing limit will not be raised before an October 17 deadline identified by Treasury Secretary Jack Lew.

‘HEADWINDS FOR MARKETS’

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

“We’re very concerned. Because right now there’s so many headwinds as it is for emerging markets and the developing world, that that kind of impact really could be devastating,” Kim told CNN.

U.S. stocks were little changed on Wednesday, after the S&P 500 dropped 1.2 percent on Tuesday, its worst decline since August 27, and hit its lowest level since September 6.

Senate Majority Leader Harry Reid reminded senators of the hit Wall Street took during the last major fight over the debt limit and government spending.

“Two years ago, the last time Republicans flirted with this terrible idea, America’s credit rating was downgraded for the first time in the history of this great country,” Reid said. “The stock market dropped 2,000 points (last time), it’s already dropped 7 or 8 percent over the last few weeks.”

Obama invited all 200 House Democrats to the White House on Wednesday to discuss the budget crisis and looming debt deadline in what officials said would be the first in a series of talks with lawmakers in both parties.

The meeting on Wednesday will take place at 4:30 p.m. EDT/2030 GMT. White House officials said the president would use the meetings to reiterate that he is willing to talk to lawmakers about any subject, but they must reopen government and raise the debt limit without conditions.

Plenty of roadblocks remain in the way of a deal. Senate Democrats have begun advancing legislation that would increase the debt limit through 2014 without any conditions.

A first procedural vote is on track for sometime Saturday. A senior Senate Democratic aide said the intention is to send the House a one-year debt limit increase without any add-ons.

Polls show the public places more blame for the shutdown and fiscal crisis on Republicans, who also bore more public blame after the last government shutdown in 1996. An Associated Press-GfK survey on Wednesday found 62 percent of Americans mostly blamed Republicans, and gave Congress as a whole a rock-bottom 5 percent approval rating.

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