December 7, 2013
US fiscal talks stumble as lawmakers race against clock for solution
Stop-start negotiations to end the US fiscal impasse left congressional leaders and President Barack Obama desperately searching for a way to reopen the government and raise the country's debt limit ahead of a Thursday deadline.
Fitch Ratings warned it could cut the sovereign credit rating of the United States from AAA citing the political brinkmanship over raising the federal debt ceiling.
Fitch's action emphasized how close to an economically damaging default Washington has come and sent US stock futures lower.
Republicans in the fractious House of Representatives said they would try a new approach after their first attempt crash-landed on Tuesday. But differences with an emerging Senate proposal could complicate prospects for final passage before October 17, when the US Treasury says the government will reach its borrowing limit.
The first alternative plan from House Republican leaders failed to gain enough support in a closed-door morning meeting for the House to proceed. The disarray raised questions about what the House will ultimately be able to pass and stoked 11th-hour uncertainty.
"We're going to continue to work with our members on both sides of the aisle to try to make sure that there is no issue of default, and to get our government reopened," House Speaker John Boehner told reporters after the meeting.
The Senate had appeared to be on a productive track with their own tentative bipartisan fiscal deal, but negotiators halted talks today as they waited for House Republicans to move first.
The new plan from House Republicans would not include a previous effort to delay a tax on medical devices that would be used to pay for Obama's healthcare plan. Obama had objected to that proposal.
But the new plan, which would extend the federal debt limit until February 7 like the Senate, would only provide government funding until December 15. The Senate, which had been close to an agreement, would keep the government open longer, until January 15.
The House will vote on their plan later today, Republican Representative Devin Nunes of California told reporters. It is unclear when the Senate will act.
The US Treasury Department seized on the downgrade threat to press Congress. "The announcement reflects the urgency with which Congress should act to remove the threat of default hanging over the economy," a Treasury spokesperson said.
After the Fitch announcement, S&P 500 futures fell 9.6 points while Dow Jones industrial average futures sank 60 points and Nasdaq 100 futures fell 7.5 points.