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U.S. Republicans seek Obamacare delay for debt limit hike

By David Lawder

WASHINGTON (Reuters) - Floating a strategy for thwarting "Obamacare" in autumn fiscal debates, House Republican leaders on Tuesday pledged to demand a one-year delay to the health reform law in any deal to raise the federal debt limit.

They also unveiled a strategy to withhold money to implement Obamacare in connection with a stop-gap funding measure that would keep government agencies open from October 1 to December 15.

House Majority Leader Eric Cantor told House Republicans in a closed-door meeting that delaying all or part of Obamacare would be a key goal in the debt limit debate, party aides said. Reuters first reported that the delay strategy was under consideration in August.

Cantor is planning to hold a House vote this week, likely on Thursday, on his plan to deny funds to the healthcare law while extending government spending authority. But House Republican conservatives are resisting the effort, saying that it is too weak to stop the healthcare reforms.

The House plan for a stop-gap funding measure known as a continuing resolution, or CR, would be split into two parts, allowing the Senate to reject the portion defunding Obamacare while passing and sending the stop-gap funding measure to President Barack Obama.

The plan would reduce chances of a government shutdown.

Cantor's and House Speaker John Boehner's logic is that the Senate would be forced to take a difficult vote to provide funding to launch Obamacare health insurance exchanges, which Republicans believe will be unpopular with voters.

While the House has voted 40 times to repeal, defund or limit Obamacare since its passage in 2010, the Democratic-controlled Senate has chosen to simply ignore most of these measures.

"We will send to the Senate the provision which says 'Up or down, are you for defunding Obamacare or not?'" Cantor said of his plan. "The House has taken a stand numerous times on its opinion of Obamacare. It's time for the Senate to stand up and tell their constituents where they stand on this atrocity of a law."

WASTED LEVERAGE

But conservatives expressed dissatisfaction with the plan, saying it would fail to take advantage of the leverage associated with the September 30 deadline for a new government spending authority and would amount to little more than another symbolic vote.

They would prefer a simpler funding measure that simply excludes appropriations for Obamacare and threatens an October 1 government shutdown if the Senate fails to pass it.

House Republican leaders "are trying to avoid actually having a vote to defund Obamacare in the House that counts," said Representative Tim Huelskamp of Kansas.

Republican moderates argue that withholding appropriations won't stop Obamacare because most of its funding comes through mandatory spending on programs such as the Medicaid healthcare program for the poor.

The funding measure introduced on Tuesday by House Appropriations Committee Chairman Hal Rogers would extend funding for 11 weeks at the current annual rate of $988 billion - a level that keeps automatic, "sequester" spending cuts in place.

Rogers called for a broader budget deal that ends the "draconian" sequester cuts set in motion by a 2011 debt limit agreement, with another round of deeper cuts set to launch in January.

"It is my hope that this stop-gap legislation will provide time for all sides to come together to reach this essential goal," he said in a statement.

The House strategy to tie a debt limit to an Obamacare delay complicates a fiscal deadline over which President Barack Obama has vowed not to negotiate. House Republicans also want to use the debt limit as leverage to demand deeper spending cuts on expensive federal benefits programs.

DEFAULT BY OCT 18? The U.S. Treasury has said that an increase in the $16.7 trillion debt limit is needed by mid-October to ensure that the U.S. government can meet all of its obligations, including debt payments.

The Bi-Partisan Policy Center, a Washington think-tank, estimated on Tuesday that without an increase in the borrowing cap, a default could come as early as October 18. Previously, the group had estimated that the government could likely pay its bills through mid-November.

The group also projected that a $1.1 trillion debt limit increase would be necessary to meet U.S. obligations through the end of 2014, a date that would cover the next congressional election cycle.

The Republican plan to add Obamacare to the party's debt limit demands drew swift criticism from Democrats, who want a "clean" increase that avoids the drama of an August 2011 hike that caused financial market turmoil and prompted Standard and Poor's to strip the United States of its top-tier credit rating

"We had hoped our colleagues across the aisle had learned that they should not put the full faith and credit of the United States at risk. They are now threatening our entire economy if we don't hand control of Americans' healthcare back to the insurance industry," said Representative Chris Van Hollen, the top Democrat on the House Budget Committee.

(This September 10 story has been refiled to fix typographical errors)

(Additional reporting by Richard Cowan; editing by Jackie Frank, Clive McKeef and Cynthia Osterman)

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