House cancels plan for debt vote

House Republicans canceled their plans Tuesday night to vote on a new plan to end the government shutdown and lift the debt ceiling after it became clear they didn't have the votes for passage.

"We are going to be prepared tomorrow to make some decisions," Rules Committee Chairman Pete Sessions (R-Texas) told reporters after GOP leaders huddled in Speaker John Boehner's office.

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"There will be no action. No votes. The rules committee will not meet," he added. 

Sessions said leadership would "take the night and make sure all of our members know what's going on." 

"We're trying to make sure what we're doing people know about and can prepare and study for," he added. 

Asked if it was a concern that Thursday's deadline was approaching with no congressional action, he replied: "Of course it is."

The abrupt action could give away any leverage House Republicans had left in the fight over raising the debt ceiling and ending the government shutdown less than two days before a deadline for preventing a possible U.S. default. 

Fitch Ratings on Tuesday evening announced it was putting the U.S. on an increased risk of a default and the nation’s AAA rating on a negative watch.

House Republicans had hoped to bring to the floor a measure funding the government through Dec. 15 and raising the debt ceiling to Feb. 7, but conservatives all day have raised various objections to it and forced their leaders to make modifications. 

To try to win over their members, GOP leaders added to a provision that would strip employer contributions lawmakers get for health insurance under ObamaCare so that it also applies to staff.

They also set up an earlier deadline for funding the government. An emerging Senate deal would have funded the government past the Christmas holidays to Jan. 15, but the House GOP plan would end funding just in time for the holidays.

Two other changes seemed designed to make the bill more appealing to Democrats.

Republicans dropped a proposal to delay a medical device tax that has opponents in both parties, and they also dropped a demand that the Health and Human Services Department employ stricter income verification for recipients of ObamaCare subsidies.

Boehner’s moves sidelined the Senate, where Majority Leader Harry Reid (D-Nev.) and Minority Leader Mitch McConnell (R-Ky.) suspended their recent talks, as the Senate GOP sought to give Boehner more maneuvering room.

The White House and Senate Democrats quickly charged that the newest House GOP plan was a nonstarter.

“We believe after Boehner finishes his antics we can very well continue to move along well,” said Sen. Charles Schumer (N.Y.), the No. 3 Democrat in the chamber.

Democrats also fumed over the House’s proposal to bar the Treasury Department from deploying “extraordinary measures” to buy more time under its borrowing cap.

By moving money around, the Treasury can sometimes buy months of extra time under the borrowing cap, but some Republicans have complained that the measures allow the administration to be unclear on exactly how long Congress can debate a debt-limit boost before a damaging default.

The Treasury contends it is impossible to predict the exact day the government would default, but the House plan would ensure the department could not continue paying bills on time beyond Feb. 7.

Treasury has said it would only have $30 billion left on Oct. 17, and that it does not have the ability to prioritize payments.

International leaders and the business community are worried about a possible U.S. default as Treasury struggles to pay U.S. bond holders while issuing checks to the military, Social Security beneficiaries and others.

Outside experts believe the government could be in danger of a default anytime between Oct. 22 and Nov. 1.

Investors on Tuesday showed tepid interest in a weekly offering of Treasury bonds Tuesday amid growing concern about the reliability of U.S. debt.

Citigroup reportedly told analysts during an earnings call Tuesday that it was trimming its holdings in Treasury debt that were due to mature before the end of the month.

The stock market fluctuated with the day's events in D.C., but equities have yet to show any dramatic swings that many in Washington thought would serve as the impetus for action. The Dow Jones industrial average ended the day down just 135 points.

Sen. Lindsey Graham (R-S.C.) said the freezing of talks in the Senate was meant to help Boehner.

“I think every member of the Republican Conference wants to try to reach out to the House members and say, 'What can we do to help John Boehner?' ” he said. “This is sort of an all hands on deck approach to help the Speaker go on offense for the party and the country. Whether we get there, I don’t know.”

Top GOP senators added Tuesday that giving Boehner some breathing room could help them, both politically and procedurally, even as they acknowledged that Republican leaders have historically had a difficult time getting major fiscal measures through the House.

Sen. John Thune (S.D.), a member of GOP leadership, said that the House acting first would give senators like Ted Cruz (R-Texas) and Mike Lee (R-Utah) fewer opportunities to slow efforts to pass a deal.

Both Cruz and Lee skipped Tuesday’s conference-wide meeting, with a Lee spokesman saying that the Utah Republican doesn’t always attend. A spokeswoman for Cruz said that the Texas senator had a “previous commitment that went long.”

Some senior Republicans remained frustrated that conservatives had led them into the current fight, with what they saw as little chance to roll back the president’s healthcare law.

“I’m frustrated at everything. This is just the latest iteration of my frustration,” said Sen. John McCain (R-Ariz.). “Really, this is terrible.”

—This story was posted at 3:08 p.m. and updated at 7:10 p.m. 

Emily Goodin and Erik Wasson contributed