Emerging House and Senate proposals to end shutdown and avoid default

Big question as clock ticks: Can the two proposals be reconciled?

As of noon on Oct. 15, both the Senate and House are preparing proposals that would end the government shutdown and raise the debt ceiling to avoid a potential default on Oct. 17.

The Senate is putting finishing touches on a proposal that is reported to extend federal borrowing authority until Feb. 7, reopen the government and fund federal agencies through Jan. 15, 2014. The proposal includes authorization for a new round of talks over broader budget issues that could produce a plan to replace the next round of automatic spending cuts (i.e., the sequester) before Jan. 15. The next round of sequester cuts is scheduled to take an additional $20 billion out of federal agency budgets, primarily from the Pentagon. (The Federal Budget Blog entry below from Sept. 20 explains why the cuts in 2014 are set to come primarily from defense.)

The Senate framework includes minor changes to the Affordable Care Act (ACA). It adds new safeguards to ensure that people who receive federal subsidies to purchase health insurance under the law are eligible to receive them based on their income. The proposal may also include a delay of a $63 per person tax on people whose previous insurance policies would continue under the ACA, the so-called “belly button tax.”

This morning the House Republican leadership announced a separate proposal, one that would also reopen the government through Jan. 15 and lifting the debt ceiling through Feb. 7. However, the House proposal would make more extensive changes in the ACA. In addition to requiring new income verification standards for those seeking to qualify for health insurance subsidies, as the Senate proposal also does, it would delay the ACA’s medical device tax for two years and require that members of Congress, the Cabinet and the president forego subsidies for their health insurance. It also would authorize a budget conference with a Dec. 15 deadline, two days longer than the Dec. 13 deadline in the Senate plan. The House proposal would also prohibit the use of special measures to extend the Treasury Department’s borrowing authority past Feb. 7. The proposal would ensure a firm deadline for the next debt-limit increase, with no flexibility for the Treasury Department’s “extraordinary measures.” The White House seems very unlikely to give up any flexibility to manage the nation’s finances. The House proposal received a mixed response even among members of the Republican caucus.

The positives: At least there are proposals now. And the two proposals have several similarities. The negative: time is running out on the Oct. 17 default deadline. If the Senate is able to bring its proposal to the floor and pass it Tuesday, and — a bigger “if”— the House can pass its proposal, there is, in theory, time to work out differences. But will a skeptic such as Sen. Ted Cruz, R-Texas, use delaying tactics to block consideration of the Senate proposal? And assuming the House and the Senate are each able to pass their individual proposals, will either body agree to the changes that would lead to an agreement the president can sign? Stay tuned!