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President and Senate Democrats Reject Republican Budget Proposals

Although the President met last Thursday with key House and Senate leaders to discuss a way forward on restoring federal government operations and raising the federal debt limit, the various proposals put forward by Republicans appear to have been stymied over the weekend. House Budget Committee Chairman Paul Ryan (R-WI) offered a plan at the meeting which would extend the debt limit and fiscal year (FY) 2014 appropriations until November 22nd and include a commitment by all parties to negotiate on tax reform and the amelioration of sequestration levels coupled with spending offsets concentrating on changes to entitlement programs, including using a reduced “chained” cost-of-living adjustment (COLA) for Social Security and proposals in the President’s budget to help reduce Medicare and Medicaid spending. After a House Republican Conference meeting on Saturday, leaders appeared dejected upon learning that the White House had rebuffed their offer. Senate Republicans, leading with a proposal fashioned by Senator Susan Collins (R-ME), attempted to reach out to the President with a separate deal, but Senate Majority Leader Harry Reid (D-NV) said this “plan is not going anywhere at this stage”. The Senate plan, endorsed by Senate Minority Leader Mitch McConnell (R-KY), would among other things have provided appropriations for six months at the sequestration level (a rate of $988 billion/year); raised the federal debt limit until January 31, 2014; delayed the Patient Protection and Affordable Care Act’s (PPACA) medical device tax for two years; and provided for enhanced verification of PPACA subsidies for individual health insurance coverage. Also, Senator Reid’s attempt on Saturday to clear a clean debt limit increase through next year failed to garner the 60 votes needed for the measure to proceed. All Senate Republicans refused to vote for cloture to enable the Senate to vote on raising the $16.7 trillion federal debt ceiling. When Congress returns on Monday, members will have only four legislative days to address the debt ceiling issue before running into the October 17th deadline that, if exceeded, could throw the economy into another recession according to Treasury Secretary Jacob Lew. In testimony before the Senate Finance Committee the Treasury Secretary also said that failure to act could lead to delays in payments being made to Medicare providers and Medicaid state agencies as well as to Social Security beneficiaries. Reportedly, the Treasury Department has already engaged in $300 billion in “extraordinary” measures to keep the federal spending spigots open, including delaying investments under the federal employee thrift savings plan. If the latest standoff continues, the House may well resort to a last minute tactic to give the Senate and the President a fairly clean, short-term bill that increases the debt ceiling and reopens the federal government.

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