The efforts of Republican leadership to pass legislation averting a US debt default and ending a partial government shutdown collapsed on Tuesday night, and a top ratings firm warned of a possible downgrade in the country’s creditworthiness.
Just hours after unveiling it, Republican leaders apparently lacking votes from their own rank and file pulled legislation to reopen the government and raise the amount of money the Treasury can borrow to pay the nation’s bills.
The wrangling in the House had imposed a daylong freeze on Senate negotiations on a bipartisan compromise that had appeared ready to bear fruit a day earlier.
Shortly after the House efforts fell apart, aides said Senate leaders had renewed talks to reopen the government and prevent a default.
A spokesman for House Speaker John Boehner had said it would be put to a vote on Tuesday night. But the Bill had been stripped of key conservative demands related to President Barack Obama’s health care plan, and Mr. Boehner soon pulled it.
The New York Stock Exchange fell 133 points after rising a day earlier when optimism spread that a deal might be at hand.
Fitch Ratings announced after the markets closed that it was putting the government’s AAA bond rating on watch because of uncertainty over the debt limit.
The partial shutdown began 15 days ago after House Republicans refused to accept a temporary funding measure to provide the money to run the government unless Mr. Obama agreed to defund or delay his signature health care reform. House Republicans also refused to move on needed approval for raising the amount of money the Treasury can borrow to pay the nation’s bills.
The latest House proposal had also done away with plan to delay a medical device tax created under the health law, and another provision to impose tougher income verification standards on individuals and families seeking subsidies for care under the law.
Democrats had viewed both as concessions to Republicans, and deemed their inclusion as a violation of Mr. Obama’s vow not to pay a “ransom” to the Republicans for passing essential funding and borrowing measures.
Congress is trying to pass two measures that are normally routine - a temporary funding Bill to keep the government running and the legislation to raise the borrowing limit.
But a hard-right tea party faction of Republicans in the House has seen both deadlines as a weapon to get their way on gutting the health care overhaul, designed to provide tens of millions of uninsured Americans with coverage.
The partial government shutdown has furloughed 350,000 federal workers.