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Analysis: House Republicans go for broke in fiscal battles

A view of Capitol Hill in Washington August 1, 2011. REUTERS/Joshua Roberts
A view of Capitol Hill in Washington August 1, 2011. REUTERS/Joshua Roberts

By Richard Cowan and David Lawder

WASHINGTON (Reuters) - Another down-to-the-wire fight, potentially more toxic than usual, is rapidly shaping up in the U.S. Congress as conservatives prepare to exploit looming fiscal deadlines to derail President Barack Obama's signature healthcare reform law.

Like previous congressional spending battles, this one involves two measures that were once relatively routine: a bill to continue funding the government to avert a shutdown, and another to increase the government's borrowing power so it can pay its debts and avoid default.

But the conflict is particularly volatile this time as, unlike the budget cuts demanded by Republicans in earlier fiscal showdowns, their demands for concessions on Obamacare on the eve of its October 1 insurance exchanges launch are non-negotiable for Democrats.

And this time, it's not just Republicans versus Democrats, but Republican against Republican. Party elders, lacking the power to make rebellious conservatives back off, have been reduced to pleading with them to do so. The conservatives, braced by the passion of Tea Party activists as the 2014 election approaches, are not inclined to cooperate.

The deadline for funding the government is September 30, when a so-called "continuing resolution" enacted last March expires. By mid-October or early November, the U.S. Treasury likely will run out of borrowing authority. Without an increase of the $16.7 trillion cap that is written into law, the federal government faces an historic default on its debt that would create havoc in global financial markets.

There is increasing talk among Republicans about a whopper bill that would fund the government from October 1 through September 30, 2014, raise the debt ceiling by giving the Treasury Department enough borrowing authority to last for a year, and impose a one-year delay of Obamacare.

"Let's give them something and we get something in exchange," Tea Party Republican Representative John Fleming of Louisiana told reporters.

It's not so simple, said Republican Senator Jeff Flake of Arizona, who spent 12 years as a House member and made his reputation as a fiscal conservative. Flake questioned his former colleague's wisdom in pushing their fight against Obamacare.

"The notion that you're going to get this (Democratic) Senate and this president to pass a repeal right now is I don't think practical," Flake said. He added, "I quit trying to understand that place (the House) as soon as I left."

FISCAL BRINKMANSHIP

Opponents to Obamacare, which will provide insurance to millions of Americans, say the law will damage healthcare as well as the nation's economy. After three years of trying and failing to repeal the law, some conservatives in the House of Representatives are willing to go for broke - literally - in their drive to prevail.

Apart from the futility of linking Obamacare to the fiscal issues, the concern of senior Republicans is that their party will take a huge public relations hit if they are blamed for the fiscal strife, as it did in the mid 1990s after successive government shutdowns precipitated by Republican budget demands.

In a CNN/ORC survey taken between September 6-8, 51 percent said Republicans would be more responsible for a shutdown, and 33 percent said Obama would take the blame.

There are risks for Democrats and Obama too. While polling results showed the public more upset with Republicans then Obama after the "fiscal cliff" fight that led to across-the-board budget cuts, Obama's Gallup approval rating started on a downward trend then from which it has yet to recover, with other polls suggesting that Americans hold all parties in Washington as well as the president responsible for "gridlock."

With the deadlines fast-approaching, the maneuvering is well underway.

The White House announced that Obama would speak to the Business Roundtable group of big-company chief executives next week. White House spokesman Jay Carney did not offer any details about what Obama will say, but he has used business groups in the past to pressure Congress to avoid fiscal brinkmanship.

"We will never accept anything that delays or defunds" Obamacare, Carney stressed again on Thursday.

In the U.S. Capitol, the top four Republican and Democratic leaders of the Senate and House met in the office of House of Representative Speaker John Boehner on Thursday to try to plot out a happy ending to their government spending and debt limit challenges.

Afterward, Boehner told reporters "there are a million options that are being discussed by a lot of people."

But while Republicans control the House, Boehner does not control Republicans.

HIGH-STAKES MANEUVER

The intra-party fight on such a high-stakes maneuver as coupling Obamacare changes to the debt limit hike is seen as pushing negotiations on the legislation right up to the October or November deadline.

In the meantime, Democrats, who control the White House and the Senate, are content to demand a no-strings-attached debt limit increase and watch Republicans tear themselves apart over this legislation, as well as the more pressing bill to keep the government running beyond September 30.

"The strategy is to watch the meltdown. This is an internal Republican dilemma, and Mr. Boehner has the hardest job in the Capitol," Democratic Representative Peter Welch, of Vermont, told Reuters.

And so, as Congress revs up for yet another gut-wrenching fiscal fight, partisan participants and non-partisan observers alike see more evidence of a dysfunctional legislature that already is the laughing stock of the country.

"The anarchists have taken over," declared Senate Majority Leader Harry Reid, a Democrat, referring to the fiscal fights. "We're in a position here where people who don't believe in government - and that's what the Tea Party is all about - are winning," said Reid.

Chris Krueger, of the Guggenheim Partners financial services firm, observed on Thursday: "The House Republican caucus is borderline ungovernable."

(Additional reporting by Mark Felsenthal, Rachelle Younglai and Caren Bohan; Editing by Fred Barbash and Tim Dobbyn)

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