Debt Limit Talks in Limbo After Senate Deal Collapses

A fragile deal to end the US budget crisis collapsed on Tuesday when Democrats accused conservative Republicans of sabotaging the bipartisan proposals less than two days before the country's borrowing authority expires.

A proposal by a group of Democrats and moderate Republicans in the Senate fizzled when GOP leaders in the House of Representatives failed to get their rank-and-file members to back a revised version.

But just as the embattled House GOP leadership attempted to muster support for a deal by adding new clauses picking away at Barack Obama's healthcare reforms, it was rejected by Democrats. "It can't pass the Senate and won't pass the Senate," said Harry Reid, the majority leader.

The latest tussle began when House Republicans met at 9am to consider a deal reached on Monday between Senate leaders that would have extended the debt limit and authorised government spending with only one token concession over healthcare.

Speaker John Boehner floated an alternative that, in addition, would delay a new tax on medical devices designed to help pay for Obamacare and deprive lawmakers of any personal health insurance subsidies.

That succeeded only in inflaming conservatives in his own party, who regard both House and Senate compromises as surrender, and Democrats, who accused Boehner of introducing unacceptable new "ransom demands".

House Republican leaders emerged from their bruising encounter with conservatives without announcing whether they would even try to stage a vote on their new proposal. "There is no decision about what exactly we will do," Boehner told reporters. "We are talking with our members and both sides of aisle to try to find a way forward today."

It was not clear if Boehner's proposals, which were strongly opposed by the White House and Senate Democrats, even carried the support of conservative members of his own party. The Republican House meeting began with a rendition of the Christian hymn Amazing Grace, but quickly descended into lively, and at times fiery, debates, according to some of those present.

Texas congressman Michael Burgess said that reaction to the Senate's bipartisan proposal was "not good", while there was only a "mixed reaction" to Boehner's plan. Jeff Fortenberry, from Nebraska, said there has been a robust discussion in the room, but he hoped the threat of default would eventually lead to a deal being passed.

A number of House Republicans were unable to explain their conference's current strategy, speaking in vague terms about coming up with a deal to "counter" the Senate plan and remaining non-committal on whether they would vote in favour of Boehner's proposals until they saw a detailed bill.

But the merest hint of fresh threats to Obamacare was enough to send Democrats into a fury.

Senator Reid held the speaker personally to blame for bowing to pressure from his conservative wing. "I am very disappointed with John Boehner, who is trying to preserve his role at the expense of the country," he said, saying the move threatened to "torpedo" the deal that was previously struck with Senate minority leader Mitch McConnell.

House minority leader Nancy Pelosi said the new Republican plan "sabotages a good-faith, bipartisan effort by the Senate, and is a luxury our country cannot afford", while her chief whip Steny Hoyer claimed Republicans wanted to "snatch confrontation from the jaws of reasonable agreement".

A visibly angry Chuck Schumer, the third-ranking Democrat in the Senate, said Boehner had killed the momentum that had gathered behind their bipartisan deal. "We're at the 11th hour. The train to avoid default was smoothly heading down the tracks and picking up speed, and at the last minute, speaker Boehner decides to throw a log on those tracks. Enough already."

The White House also emphatically rejected the new Republican approach."The president has said repeatedly that members of Congress don't get to demand ransom for fulfilling their basic responsibilities to pass a budget and pay the nation's bills," spokeswoman Amy Brundage said in a statement.

"Unfortunately, the latest proposal from House Republicans does just that in a partisan attempt to appease a small group of Tea Party Republicans who forced the government shutdown in the first place.

"Democrats and Republicans in the Senate have been working in a bipartisan, good-faith effort to end the manufactured crises that have already harmed American families and business owners," she continued.

"With only a couple days remaining until the United States exhausts its borrowing authority, it's time for the House to do the same."

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