House conservatives sabotage Boehner plan to end shutdown

Collapse had senators trying to restart talks

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Conservatives in the House sabotaged Speaker John A. Boehner’s plan Tuesday to dent Obamacare while reopening the government and raising the debt ceiling, leaving senators scrambling to kick-start their own deal before Thursday’s deadline for a potential default.

The conservatives said Mr. Boehner’s plan sounded too much like a surrender to President Obama, as it left most of his health law in place.

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As the chances grew for missing the Treasury Department’s Thursday deadline to increase the debt limit, stock markets tumbled and one of the nation’s three credit ratings agencies put U.S. debt on a negative watch, which could precede a downgrade.

After the House efforts collapsed, top Democrat Sen. Harry Reid and top Republican Sen. Mitch McConnell resurrected their negotiations, which had been put on hold all day.

Sen. Reid and Sen. McConnell have re-engaged in negotiations and are optimistic that an agreement is within reach,” Adam Jentleson, Mr. Reid’s spokesman, said late Tuesday — though they adjourned late Tuesday without having finalized anything.

The deal they had under discussion would be far more tilted toward Democrats’ liking than what Mr. Boehner had devised.

If the Senate can pass its bill, it essentially will challenge Mr. Boehner to try to get it through the House on the strength of Democratic votes.

The two Senate leaders had been working on a plan that would include stopgap funding for the government through Jan. 15 and give the government borrowing authority through February. Mr. McConnell was still hoping to make some dents in Obamacare, but he lost much of his leverage when House conservatives undercut Mr. Boehner.

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Without action, the government shutdown, already in its third week, will continue. And the Treasury Department says that if the $16.7 trillion debt ceiling isn’t raised by Thursday, it will run out of maneuvering room and will only be able to pay bills with cash on hand.

At some point — the time is hotly debated — that will mean missing payments on Social Security checks or veterans’ benefits or other government operations.

While the Treasury Department has not said it will stop making debt payments, which would avoid a technical default, it said the consequences could still be disastrous.

Indeed, Fitch Ratings put U.S. Treasury bonds on a negative ratings watch Tuesday, saying that even if the federal government continued to make debt payments, cuts to other spending would “damage the perception of U.S. sovereign creditworthiness.”

The other two ratings agencies, Moody’s Investors Service and Standard & Poor’s, have not signaled similar warnings yet.

House Republicans were left reeling by the conservative revolt within their ranks.

In characterizing the situation, one Republican, Rep. Devin Nunes, posted a Twitter message Tuesday night that linked to a video of the climactic scene in “Star Wars” when the Death Star explodes.

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