By David Lawder and Richard Cowan
WASHINGTON (Reuters) – With a deadline to avert a federal government shutdown fast approaching, the U.S. Capitol was eerily quiet on Sunday as Republicans and Democrats waited for the other side to blink first and break the impasse over funding.
The Republican-controlled House of Representatives early on Sunday passed a measure that ties government funding to a one-year delay of President Barack Obama’s landmark healthcare restructuring law. Senate Democrats have vowed to quash it.
If a stop-gap spending bill for the new fiscal year is not passed before midnight on Monday, government agencies and programs deemed non-essential will begin closing their doors for the first time in 17 years.
In a sign that lawmakers increasingly view that as inevitable, the House unanimously approved a bill to ensure that U.S. soldiers would be paid no matter what happened.
The high-stakes chess match in Congress will resume on Monday when the Democratic-controlled Senate reconvenes at 2 p.m. Senate Democrats will then attempt to strip two Republican amendments from the spending bill: the one that delays the 2010 healthcare law known as Obamacare and another to repeal a medical device tax that would help pay for the program.
They would then send a bill with a simple extension of government spending back to the House, putting the legislative hot potato back in Republican House Speaker John Boehner’s lap as the shutdown looms.
“Tomorrow, the Senate will do exactly what we said we would do and reject these measures,” said Adam Jentleson, a spokesman for Senate Majority Leader Harry Reid. “At that point, Republicans will be faced with the same choice they have always faced: put the Senate’s clean funding bill on the floor and let it pass with bipartisan votes, or force a Republican government shutdown.”
The impasse prompted a sell-off on Asian markets on Monday, with Japan’s benchmark Nikkei shedding 1.7 percent and Hong Kong’s Hang Seng Index off 1.2 percent. U.S. stock futures also fell.
DEBT LIMIT PRELUDE
The funding standoff is a harbinger of the next big political battle: a far-more consequential bill to raise the federal government’s borrowing authority. Failure to raise the $16.7 trillion debt ceiling by mid-October would force the United States to default on some payment obligations – an event that could cripple its economy and send shockwaves around the globe.
And yet, neither side wants to be the one to cast the final vote that would lead to a shutdown. Polls consistently show the American public is tired of political showdowns and opposed to a shutdown.
There were no signs from Congress or the White House of last-minute negotiations to resolve the standoff. Instead, Democrats and Republicans spent their energies trying to pin blame on the other side for failing to avoid a calamity.
No lawmakers were seen in or around the Capitol during daylight hours on Sunday until late afternoon when 16 House Republican members held a news conference on the Senate steps to call on Reid to pass the funding and “Obamacare” delay measure.
“I personally believe that Senator Reid and the president, for political purposes, want to shut down the government. It’s a scorched earth policy,” said Representative Tim Griffin, a Republican from Arkansas.
Democratic Senator Charles Schumer shot back that the Republican tactics were a “subterfuge” to avoid blame for a shutdown. “So instead of continued game-playing, we urge Speaker Boehner to reconvene the House, pass a clean CR (continuing resolution) and move on,” he said in a statement.
Boehner and Reid have taken a low profile as the deadline draws closer, leaving on-camera appearances to deputies and often speaking through their press staffs.
One of Boehner’s deputies, Representative Kevin McCarthy, said if the Senate stripped the funding bill of the “Obamacare” provisions, House Republicans would simply return it with other changes to the healthcare law.
“It will be additions that Senate Democrats said they can support,” McCarthy told “Fox News Sunday,” without specifying these “other options.”
The repeal of the medical device tax did win some Democratic support in the House early on Sunday.
Obama has threatened to veto any bill that delays his healthcare program.
The funding impasse is the culmination of more than three years of failed conservative efforts to repeal “Obamacare,” a program aimed at extending health insurance to millions of those without coverage.
Republicans argue that the healthcare law, key parts of which are set to launch on October 1, is a massive and unnecessary government intrusion into medicine that will cause premiums to skyrocket and damage the economy.
And if the battle over “Obamacare” pushes up to the mid-October deadline to raise the debt ceiling, U.S. stocks may suffer. When gridlock threatened a debt default in 2011, the Dow Jones industrials fell about 2,100 points from July 21 to August 9, with the market needing two more months to regain its footing.
Under a government shutdown, more than a million federal employees would be furloughed from their jobs, with the impact depending on the duration of a shutdown.
The current timetable could leave Boehner with the most difficult decision of his career: whether to approve a clean continuing resolution the Senate will likely send it Monday afternoon or allow the government to shut down for the first time since late 1995.
In a government shutdown, spending for functions considered essential, related to national security or public safety, would continue along with benefit programs such as Medicare health insurance and Social Security retirement benefits for seniors.
But civilian federal employees – from people who process forms and handle regulatory matters to workers at national parks and museums in Washington – would be temporarily out of work.
The last government shutdown ran from December 16, 1995, to January 6, 1996, and was the product of a budget battle between Democratic President Bill Clinton and Republicans, led by then-Speaker Newt Gingrich.
Republicans suffered a public backlash when voters re-elected Clinton in a landslide the following November, a lesson never forgotten by senior Republicans, including Boehner.