WASHINGTON (TIP): Republicans offered a plan to President Barack Obama on Thursday that would postpone a possible US default in a sign the two sides may be moving to end the standoff that has shuttered large parts of the government and thrown America’s future creditworthiness into question. No deal emerged from a 90-minute meeting at the White House, but the two sides said they would continue to talk. It was the first sign of a thaw in a political crisis that has weighed on financial markets and knocked hundreds of thousands of federal employees out of work. “It was a very adult conversation,” said Republican Representative Hal Rogers, who attended the meeting. “Both sides said they were there in good faith.” The Republican offer would extend the government’s borrowing authority for several weeks, staving off a default that could come as soon as October 17.
It would not necessarily reopen government operations that have been shuttered since October 1, but a Republican aide said that was part of the discussion as well. Significantly, Republicans seemed to be steering clear of the restrictions on Obama’s healthcare reforms and spending that prompted the crisis in the first place. The two sides instead are negotiating how far to extend the debt limit and how much funding they would provide the government when it opens, a Republican aide said. Both sides were expected to continue talks into the night. “The President looks forward to making continued progress with members on both sides of the aisle,” the White House said in a statement. Conflicting reports of the outcome of the meeting sent immediate ripples through financial markets. US equity index futures tracking the S&P 500 index dropped after a report that Obama had rejected the Republican offer, but rose when details of the meeting trickled out. Major US equity indexes closed 2 per cent higher earlier on Thursday on hopes of a deal.
Shift by Republicans
The proposal is a significant shift for Republicans, who had hoped to use the threat of a shutdown and a default to undermine Obama’s healthcare law and win further spending cuts. Those goals remain, but the Republican offer would at least push off the threat of default from October 17 until possibly the middle or end of November. That would give Republicans more time to seek spending cuts, a repeal of a medical-device tax, or other measures they say are needed to keep the national debt at a manageable level. The crisis began in late September when Republicans tied continued government funding to measures that would undercut the Affordable Care Act, Obama’s signature legislative accomplishment.