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House GOP Unveils Short-Term Debt Ceiling Extension

Jeremy Fuster |
October 10, 2013 | 11:21 a.m. PDT

Executive Producer

Obama and Boehner shake hands before the 2011 State of the Union Address (Wikimedia Commons)
Obama and Boehner shake hands before the 2011 State of the Union Address (Wikimedia Commons)
House Republican leaders announced on Thursday that they will propose a temporary extension of the debt ceiling until November 22, a step that could be the start of a compromise that will end the government shutdown that began ten days ago and avoid the U.S. default deadline that is one week away. 

House Speaker John Boehner said the measure would pass if President Barack Obama agreed to negotiate with Republicans over ending the shutdown and planning a longer-term resolution to the debt ceiling. Though this plan would keep the country from failing to meet the Oct. 17 default deadline, it is no guarantee that the government shutdown will come to an end.

“What we want to do is offer the president today the ability to move,” Boehner said. The offer, he said, would be “a temporary increase in the debt ceiling, an agreement to go to conference on the budget, for his willingness to sit down and talk with us a way forward to open the government.”

A White House official told the AP that Obama would be willing to sign a short-term bill, but would only begin long-term budget negotiations "once Republicans in Congress act to remove the threat of default and end this harmful government shutdown."

SEE ALSO | China Voices Concern Over U.S. Debt Ceiling

Republicans remain divided on the plan, with House Budget Committee chairman Paul Ryan, R-Wi., supporting the plan in a Wall Street Journal op-ed. Ryan called for a short-term deal that would buy politicians more time to talk about a larger budget deal that would include "modest reforms to entitlement programs and the tax code."

But the op-ed did not mention any plans to demand changes to the Affordable Care Act, which is being seen as a signal that Republican leaders are starting to detach their demands surrounding the healthcare reform from debt ceiling and shutdown negotiations. This has angered some conservatives, such as the group Heritage Action, whose spokesman compared Ryan's editorial to the White House press.  

Wall Street reacted strongly to the news of Boehner's proposal. The Dow Jones industrial average made a 200-point increase at the opening bell to rise back above 15,000, while the S&P 500 gained 24 points and the NASDAQ index gained 61.7 points. Randy Frederick, managing director of active trading at Charles Schwab, told the Los Angeles Times that investors expect lawmakers to find a compromise at some point and avoid the default completely, and that the market "is looking for anything to move higher."

But while Wall Street hasn't hit the panic button just yet, Treasury Secretary Jacob Lew warned the Senate Finance Committee on Thursday that they need to act immediately. The government's interest rate for one-month Treasury bills has tripled since the shutdown, reaching a level not seen since the start of the 2008 recession. 

"The United States should not be put in a position of making such perilous choices for our economy and our citizens," Lew said. "There is no way of knowing the irrevocable damage such an approach would have on our economy and financial markets."

But Lew's warning was met with heavy skepticism from Republican Senators. "I think this is 11th time I've been through this discussion about the sky is falling and the earth will erupt," said Sen. Mike Enzi, R-Wy.

Republicans pressed Lew for more information on Obama's willingness to include entitlement programs in the budget talks and how long a debt ceiling extension the President would like to see, but Lew simply responded saying that the longer the extension, the better. 

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