House Republican debt plan in disarray

WASHINGTON — Their backs against the wall, House GOP leaders scrambled Tuesday to forge a plan to counter an emerging bipartisan Senate deal to reopen the government and forestall a default on U.S. obligations.

House Speaker John Boehner, a Republican from Ohio, speaks to members of the media at the Capitol in Washington on Oct. 15, 2013. about a House plan to reopen the government and raise the debt ceiling.

But the effort fell into disarray amid grumbling by party conservatives and it was unclear whether GOP leaders could keep it afloat — even as the potential peril to the U.S. economy deepened with a debt deadline less than two days away.

Though Republicans appeared to back off earlier demands for spending cuts as a condition of raising the government's borrowing cap, the partisan standoff between Democrats and House Republicans continued with little certainty over how Congress would bring about the end to the crises.

Jittery investors sent stocks modestly lower.

Related: Congress lumbers while threatened default looms

It was not clear whether the House GOP plan could pass the chamber.

The House measure mirrors in several respects a Senate plan that has generally taken shape. The House would suspend a new tax on medical devices for two years and take away the federal government's health care contributions to lawmakers and top administration officials. It would also fund the government through Jan. 15 and give Treasury the ability to borrow normally through Feb. 7, provisions embraced by Senate leaders in both parties.

House Speaker John Boehner, R-Ohio, said he's "trying to find a path forward" but that "there have been no decisions about exactly what we will do." He told a news conference, "There are a lot of opinions about what direction to go." GOP leaders went behind closed doors to massage the plan in hopes of a vote later Tuesday.

Senate Majority Leader Harry Reid, D-Nev., involved in negotiations with Senate GOP Leader Mitch McConnell of Kentucky, blasted the House plan as a blatant attack on bipartisanship. Senate talks appeared on hold as Boehner weighed his next move.

"It can't pass the Senate and it won't pass the Senate," Reid said. That sparked an angry response from Sen. John McCain, R-Ariz., who accused Reid of "piling on" and urged him to consider the House effort as a good-faith offer.

"We know you have the upper hand," McCain said. "Isn't it time that we find a way out of this?"

House Democratic leader Nancy Pelosi, D-Calif., said it was clear that Boehner "did not have the votes" for the House leadership plan. Pelosi said the Reid-McConnell plan has "struck fear in the hearts of the House Republicans," who she said want to "sabotage the bipartisan effort" in the Senate.

The developments came as a partial shutdown entered its third week and less than two days before the Treasury Department says it will be unable to borrow and will rely on a cash cushion to pay the country's bills.

The House GOP plan wouldn't win nearly as many concessions from President Barack Obama as Republicans had sought but it would set up another battle with the White House early next year.

Federal shutdown starting to ripple through states.

Rep. Walter Jones, R-N.C., said he was not sure he could vote for the plan because it did not address the debt. "I have to know a lot more than I know now," he said.

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

Obama planned to meet with House Democratic leaders Tuesday afternoon as negotiations continue.

"The latest proposal from House Republicans does just that in a partisan attempt to appease a small group of tea party Republicans who forced the government shutdown in the first place," said White House spokeswoman Amy Brundage. "Democrats and Republicans in the Senate have been working in a bipartisan, good-faith effort .... With only a couple days remaining until the United States exhausts its borrowing authority, it's time for the House to do the same."

Political pressure is building on Republicans to reopen the government and GOP leaders are clearly fearful of failing to act to avert a default on U.S. obligations.

Republicans are in a difficult spot, relinquishing many of their core demands as they take a beating in the polls. As the Republicans met privately to discuss the latest plan, Rep. Steve Southerland, R-Fla., led them in several verses of "Amazing Grace."

"We have to stick together now," said Rep. Pete Sessions, R-Texas.

Like the House GOP bill, the emerging Senate measure — though not finalized — 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 competing House and Senate plans are 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.

Neither the House or Senate frameworks 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.

Another difference between the Democrats and Republicans involves a Democratic move to repeal a $63 fee that companies must pay for each person they cover under the big health care overhaul beginning in 2014. Unions oppose the fee and Senate Democrats are pressing to repeal it, but House Republicans are positioning to block them and Senate Republicans are adamantly opposed as well.

Democrats were standing against a GOP-backed proposal to suspend a medical device tax that was enacted as part of the health care law, but might not be able to win a floor vote since many Democrats oppose the tax too.

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

In addition to approving legislation to fund the government until late this year and avert a possible debt crisis, the potential Senate 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.