Defiant House delays Obamacare; government shutdown looms

WASHINGTON (CNN) -- In a move that makes a government shutdown very likely, House Republicans approved a spending plan early Sunday morning that would delay Obamacare for a year and repeal its tax on medical devices.

The temporary budget resolution now goes back to the Senate, where Democrats have consistently said any changes to President Barack Obama's signature healthcare law is a deal-killer.

On top of that, Obama has already issued a veto threat.

If Washington can't reach a deal, a government shutdown will begin at 12:01 a.m. Tuesday.

"The Republicans' first try was to defund Obamacare. Now they are slowly chipping away at it," said Dana Bash, CNN's chief congressional correspondent. "They want the president to negotiate. That is their line: the president needs to come to the table and negotiate."

A Senate Democratic source told CNN there were no plans for the Senate to meet before Monday -- the day the current fiscal year ends.

Congress could avert a shutdown by passing a temporary spending measure while the two chambers work out their differences. But neither side is talking about that now.

"I've not talked to anybody here who doesn't think it's a very, very big possibility, even Republicans, that the government won't shut down -- even for a short time," Bash said.

Going after the tax

The decision to vote on the House amendments overnight emerged from a rare weekend GOP caucus meeting called by House Speaker John Boehner. The votes, taken after midnight, were 231-192 for the Obamacare delay, and 248-174 for the medical device tax repeal, mostly along party lines.

Two Democrats broke rank and voted for the Obamacare delay: Mike McIntyre of North Carolina, and Jim Matheson of Iowa.

Seventeen Democrats voted for the tax repeal.

Meanwhile, a bill to guarantee pay for military personnel during any shutdown passed 423-0.

House Republicans had said they wanted to stop as much of the president's health law as possible. The medical device tax is one of the more controversial taxes in the law, with Republicans saying it sends jobs overseas.

Democrats, particularly those from states or districts with medical device manufacturers, have spoken out against the tax.

"Republicans have pointed out over and over the entire day that many Democrats in the Senate are already on record voting for this repeal," Bash said. "So that's why they're trying to put Democrats there in a box."

"But we're already being told by Democratic sources in the Senate that they feel they're going to keep all of their Senators in line," she said.

Senate Majority Leader Harry Reid called the Republican strategy "pointless" and said the Democratic-led Senate would reject the GOP alternatives. The White House said Obama would veto the House proposal if it reached his desk.

A separate White House statement said voting for the GOP measure "is voting for a shutdown."

Partisan back and forth

The back and forth over the spending plan -- called a continuing resolution in legislative jargon -- began when House Republicans stripped all funding for Obamacare from their original version and sent it to the Senate.

The Senate, where Democrats hold a slim majority, restored the funding on Friday and kicked the plan back to the House.

On Saturday, Boehner convened his caucus to forge a counteroffer to the Senate changes.

House Republicans added an amendment that would fund the government until December, a month longer than the Senate version. They also added a "conscience clause" to the one-year delay amendment to allow employers and insurance plans to refuse to cover birth control.

Keeping military pay

In a sign that the House Republicans don't expect the Senate to accept their changes, House leaders held a separate vote to ensure that the military gets paid in the event of a government shutdown.

Officials estimate the military pay could be affected by a shutdown as soon as October 14, and the GOP move was considered a political gesture to shield the party from criticism that its brinksmanship could hurt U.S. fighting forces.

But on the spending plan, Reid said the Republican tactics amounted to what he described as extortion by "tea party anarchists."

"To be absolutely clear, the Senate will reject both the one-year delay of the Affordable Care Act and the repeal of the medical device tax," Reid said in a statement. "After weeks of futile political games from Republicans, we are still at square one."

White House spokesman Jay Carney added that Obama would not negotiate on Obamacare or spending issues "under threats of a government shutdown that will hurt our economy."

Shutdown looms

Reid previously warned that any changes to the Senate's version by the House would result in at least the start of a government shutdown because of the time it would take to reconsider the proposal.

Republican Rep. Michael Grimm of New York said Saturday a "slight" shutdown could occur due to the little time left to pass a short-term spending plan for the new fiscal year that starts Tuesday.

"I'm hoping no, but just look at the timing," Grimm said, laying out a scenario in which the political wrangling leads to last-minute deliberations on Monday and beyond.

The prospect of a government shutdown caused by GOP tactics irked the longest serving member of Congress in history, Democratic Rep. John Dingell of Michigan, who said in a statement that "this once-deliberative body has been taken over by knaves and know-nothings, content with putting partisan politics ahead of the American people."

Obama not backing down

Tea party conservatives want to halt Obamacare now, just as full implementation of its individual health care exchanges begins in the new fiscal year starting Tuesday.

More moderate Republicans, such as veteran Sens. John McCain of Arizona and John Cornyn of Texas, criticize the strategy of tying a government shutdown to undermining the health care reform law passed by Democrats in 2010 and upheld by the Supreme Court last year.

Obama said Friday that new exchanges for private health insurance under the reforms will open this week as scheduled -- even if there is a government shutdown.

"The House Republicans are so concerned with appeasing the tea party that they have threatened a government shutdown or worse unless I gut or repeal the Affordable Care Act," Obama said. "That's not going to happen."

Political fallout

Even if the government were to shut down, Obamacare would probably continue anyway. That's because most of the funding for Obamacare comes from new taxes and fees as well as from cost cuts to other programs like Medicare and other types of funding that carry on even in the event of a government shutdown.

Congress' research arm, the Congressional Research service, prepared a memo for Republican Sen. Tom Coburn, R-Oklahoma, that suggested an effort to use the government shutdown as leverage to force Democrats to delay implementing the law would not really work because the law will continue regardless of a shutdown.

Plus, the law would still be in effect, so its many new requirements -- everything from forcing insurance companies to cover anyone who wants insurance to requiring Americans to carry health insurance or pay a fine -- would still be in effect, too.

Republican leaders in both chambers don't want a shutdown now over the spending issue, for political and negotiating reasons.

They fear the optics of Republicans being blamed for a shutdown, and also want to exert as much leverage as possible for the GOP's agenda at the upcoming deadline to raise the federal debt limit.

The debt ceiling

The shutdown showdown comes a few weeks before another fiscal deadline -- the need to raise the nation's debt ceiling so the government can pay all its bills.

Treasury Secretary Jack Lew said last week the limit on how much the government can borrow must be increased by October 17 or the nation could be technically in default.

Analysts warn of severe economic impact from any doubt cast over whether the U.S. would fail to meet its debt obligations. A similar bout of congressional brinksmanship over the debt ceiling in 2011 led to the first-ever downgrade of the U.S. credit rating.

Boehner faces the same rift in his caucus over the debt ceiling issue, with tea party conservatives pushing to undermine Obamacare and fulfill other Republican priorities in return for what Obama calls the responsibility of Congress to make sure America can pay its bills.

On Thursday, Boehner had to delay introducing a GOP debt ceiling plan after conservatives complained the proposed package failed to include enough budget cuts and significant changes to entitlement programs.

The initial proposal by House GOP leaders, which would raise the debt ceiling for a year, included a one-year delay of Obamacare, provisions to roll back regulations on businesses, tax reforms and approval of the Keystone XL oil pipeline.