As the Senate prepared to vote on a budget deal that could end the government shutdown and avert default on America’s debt, House Republicans publicly expressed doubt that the measure would pass in the House, putting the nation’s and world’s financial markets on the verge of meltdown
But though the entire globe is watching the Washington lawmakers in astonishment, wondering how such dysfunction and suicidal thinking could fester in the world’s biggest economy, House Republicans weren’t shy about admitting to their No. 1 priority: re-election.
“We’ve got a name for it in the House: it’s called the Senate surrender caucus,” Representative Tim Huelskamp, Republican of Kansas, said after they heard the details of the Senate deal. “Anybody who would vote for that in the House as Republican would virtually guarantee a primary challenger.”
So as the nation crumbles around them and the world is on the brink of financial collapse, this lawmaker from Kansas expressed the staggeringly self-centered mood of House Republicans, who care only about their job security while the rest of the world suffers.
The Senate could vote on their version of an agreement as soon as Wednesday, if the majority leader, Senator Harry Reid, and the minority leader, Senator Mitch McConnell, get the go-ahead from their members in meetings today.
The Senate plan would reopen the government until Jan. 15 and raise the debt limit until Feb. 7 while also including language to conclude negotiations on a longer-term budget by the middle of December.
The possibility that on Thursday the government would not be able to meet its obligations led observers to scream about the economic catastrophe that could ripple through stock markets, foreign capitals, corporate boardrooms, state budget offices and the bank accounts of everyday investors.
“If Republicans aren’t willing to set aside their partisan concerns in order to do what’s right for the country, we stand a good chance of defaulting, and defaulting could have a potentially devastating effect on the economy,” Obama told reporters at Martha’s Table, a Washington-area food bank.
Federal programs administered by the states, like Medicaid and food stamps, would be hit, while a market collapse could undermine state pension plans and lead to higher interest rates from a default on federal bonds that could make short-term borrowing more difficult and costly for states.
“This has us pretty nervous; it’s just a mess,” said John E. Nixon, the budget director for the state of Michigan. “We are taking it very seriously, and we have our agencies preparing contingency plans. But obviously nobody really knows how it’s going to unfold, so you can only plan so much.”
In Britain, Jon Cunliffe, who will become deputy governor of the Bank of England next month, told Parliament that banks should begin developing contingency plans to deal with an American default if one happens.
From China came this: A call to the “befuddled world to start considering building a de-Americanized world.”
George Goncalves, a Treasury strategist at Nomura Securities, said investors might not immediately panic if a deal seemed imminent.
“If it’s clear it’s going to happen by midnight, people will give them the benefit of the doubt because everyone knows it’s not a hard deadline,” Goncalves said.
While staff members at the Treasury, Federal Reserve and Federal Reserve Bank of New York are working behind the scenes to prepare, about 4 in 5 staff members are furloughed at the Treasury Department, including officials from the Office of Fiscal Projections, which is critical in determining the balances in the government’s accounts.
A Republican-backed measure likely to be in the deal would require tighter income verification standards for people who receive subsidies under the new health care law, making the Health and Human Services secretary have to certify that the department can verify income eligibility.
The House is also tinkering with its own plan, which would include a change to Obamacare: members of Congress and the Cabinet would be compelled to obtain health care coverage through the Affordable Care Act but would not receive the employer subsidy from the government.
In addition, it would suspend a medical device tax for two years, something that was dropped from the Senate compromise. But the changes to Obamacare are likely to attract the scorn of Democrats.
Republicans said it would make it easier for a bill to clear the House if it passes the Senate with overwhelming Republican support. These Republicans think House Speaker John Boehner will have no choice but to ignore his most vocal members and put whatever passes the Senate up for a vote.
“We’re now backed into a corner,” said Representative Peter T. King, Republican of New York. “We have to do this by Thursday. We have to make it work, but it’s not going to be perfect.”