Debt Talks in Disarray as House Balks

WASHINGTON — On the brink of a historic default, House Republicans on Tuesday abruptly postponed a vote on their latest proposal to reopen the government and raise the debt limit, as a major credit agency warned that the United States was on the verge of a costly ratings downgrade. 

Hard-line conservatives and more pragmatic Republicans were in open revolt Tuesday evening, after the House Republican leadership rushed out a new bill in the afternoon, forcing a postponement of any vote on the measure. With the latest delay, chances increased that a resolution would not be reached before the Treasury exhausted its borrowing authority on Thursday. 

After the House put off any action, the Senate majority leader, Harry Reid of Nevada, and Mitch McConnell of Kentucky, the chamber’s Republican leader, quickly announced that they had resumed talks toward a deal. “Senator Reid and Senator McConnell have re-engaged in negotiations and are optimistic that an agreement is within reach,” said Adam Jentleson, a spokesman for Mr. Reid. The statement appeared aimed at calming the financial markets and assuring Americans that Congress was acting with the deadline so close. 

Stock markets dipped as meetings continued on Capitol Hill and at the White House, and Fitch, a global credit rating agency, warned that Congressional intransigence had put the full faith and credit of the government at risk. The firm has put the United States on a “negative ratings watch,” but it reaffirmed the country’s sterling AAA credit rating. 

The news came as the Treasury Department said it had only about $35 billion in cash on hand. It expects to run out of “extraordinary measures” to keep paying all of the government’s bills on Thursday. 

Fitch warned that Congress had not “raised the federal debt ceiling in a timely manner.” It said that it “continues to believe that the debt ceiling will be raised soon,” but that “political brinkmanship and reduced financing flexibility could increase the risk of a U.S. default.” 

The firm did not say whether it would consider downgrading the country’s rating even if Congress struck a last-minute deal, as Standard & Poor’s did in 2011. 

Brandi Hoffine, a Treasury Department spokeswoman, said the announcement by Fitch “reflects the urgency with which Congress should act to remove the threat of default hanging over the economy.” 

The day began with a setback for the House speaker, John A. Boehner, Republican of Ohio, who emerged from a two-hour meeting of his fractious caucus to say that the leadership had failed to produce a path forward, soon after it released the framework of a plan to end the shutdown and raise the debt ceiling. 

“It’s very, very serious,” said Senator John McCain, Republican of Arizona. “Republicans have to understand we have lost this battle, as I predicted weeks ago, that we would not be able to win because we were demanding something that was not achievable.” 

The sudden turn toward pessimism came 15 days into a government shutdown and two days before the Treasury exhausts its borrowing authority. At this point, the arguments have devolved from a major partisan showdown over the fate of President Obama’s signature domestic achievement to issues reduced in scope: whether White House and Congressional staff members be denied employer contributions to purchase their health care; whether a tax on medical devices, opposed by lawmakers in both parties, should be repealed, delayed for two years, or left alone; and whether a tax on self-insurers — large businesses and unions — that enter the health insurance exchanges should remain in force. 

But if the issues seem small, the fights — largely now within the Republican Party — seem to be raging unabated. 

“We’re trying to find a way forward in a bipartisan way that would continue to provide fairness to the American people under Obamacare,” Mr. Boehner said, even as he acknowledged that “there are a lot of opinions” among his fractious members. 

Senate Republican leaders encouraged their rank and file to remain patient to see if Mr. Boehner could find anything that would unite his troops, fearing that moving first would undermine a speaker already squeezed between the Tea Party and more pragmatic members strongly urging him to reopen the government. 

“Clearly they’re still working on it, and we want to be supportive of that effort,” said Senator John Hoeven, Republican of North Dakota. 

Mr. Obama, in an interview taped Tuesday morning with WABC television in New York, said the bipartisan discussions in the Senate were “real good news” that suggested Republicans in that chamber understood that efforts to “extract ransom” was a bad strategy for them. 

But he said that not all members of the party had gotten that message, adding that “I think the House Republicans still believe they can get concessions for doing their job.” 

Still, Mr. Obama expressed confidence that a deal to reopen the government and lift the nation’s debt ceiling could be put in place by the time the nation loses its ability to manage its debts on Thursday. 

“Because we have seen movement my expectation is that it does get solved, but we don’t have a lot of time,” Mr. Obama said. 

Patience is growing thin. Senator Susan Collins, Republican of Maine, practically begged Senate leaders in both parties to move without the House, hoping that an overwhelming bipartisan vote would force Mr. Boehner to put the Senate-passed bill up for a vote. 

“At this point, I think the Senate needs to lead, and we need to send over a plan to try to get government open,” she said. 

Democratic aides in the Senate still expressed hope that Senate Republican leaders would move forward fast if the House remained stuck by the end of Tuesday. 

If House Republicans fail, “that means the Senate will have to go,” said Senator Lindsey Graham, Republican of South Carolina. “That means that what we get out of the Senate is going to be less palatable, less good government, and it probably would pass mostly with Democratic votes, which I think puts Speaker Boehner in a compromised situation.” 

Representative Adam Kinzinger, Republican of Illinois, said that if House Republicans could not rally behind a proposal from their leadership, they would most likely be forced to accept the plan taking shape in the Senate — something many Republican House members have already said is unacceptable. 

“If our party can’t pass this, then there’s no doubt we’re going to end up with what the Senate sends us,” Mr. Kinzinger said. “Look, if my colleagues can’t muster together and sometimes accept good because they’re waiting for perfect, then that’s on them.” 

House Democrats, along with one moderate House Republican, met Tuesday morning with the chief negotiators of a bipartisan Senate deal to reopen the government, signaling movement to force the plan to a vote in the House if it passes the Senate. 

About 20 Democrats and Representative Charlie Dent, Republican of Pennsylvania, huddled for a half-hour with Senators Susan Collins, Republican of Maine, and Joe Manchin III, Democrat of West Virginia, who have been pushing the plan. Democrats emerged Tuesday morning united against any alternative that might emerge in the House. 

If House Republicans cannot pass a counterproposal on their own, a bipartisan group in the House would demand a vote on the Senate bill. The same situation early this year allowed a bipartisan Senate reauthorization of the Violence Against Women Act to pass the House with a minority of Republicans in support. 

“It’s a bipartisan plan,” Representative Peter Welch, Democrat of Vermont, said of the Senate proposal. 

Mr. Obama was scheduled to tape interviews with several local television anchors at the White House on Tuesday morning. In the afternoon, the president was set to award the Medal of Honor to Capt. William Swenson of the Army. His schedule also included a meeting with Defense Secretary Chuck Hagel on Tuesday afternoon. 

But White House aides will be keeping a close eye on negotiations on Capitol Hill. An Oval Office meeting between Mr. Obama and the Congressional leadership was canceled on Monday afternoon to give lawmakers more time to negotiate the details of a deal. But another meeting could be scheduled at any time on Tuesday. 

Other showdowns between Republican lawmakers and Mr. Obama have gone to the last minute; in 2011, lawmakers reached a deal to raise the debt ceiling two days before officials said a default was possible, resulting in a stock market plunge and the downgrading of the nation’s credit rating. 

But the real possibility that as of Thursday the government would not be able to meet its obligations prompted grim warnings of an economic catastrophe that could ripple through stock markets, foreign capitals, corporate boardrooms, state budget offices and the bank accounts of everyday investors. 

“If Republicans aren’t willing to set aside their partisan concerns in order to do what’s right for the country, we stand a good chance of defaulting,” Mr. Obama told reporters Monday at Martha’s Table, a Washington-area food bank, “and defaulting could have a potentially devastating effect on the economy.” 

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