President Barack Obama and congressional Republicans on Wednesday began hurtling toward an unpredictable collision over the federal budget, as the House of Representatives planned to vote to strip money from the national health care law while the White House readied plans for a government shutdown.
That vote in the Republican-dominated House, expected later this week, will set the stage for a spending showdown likely to last for days. Next week, the House plans to unveil another measure aimed at delaying the law.
The new federal fiscal year begins Oct. 1, and unless Congress and Obama agree on a budget, much of the government will be out of business.
The new Republican plan, announced Wednesday, would finance the government but also defund implementation of the 2010 health care law. That's expected to pass the House but stall in the Democratic-led Senate.
That's the scenario for stalemate. White House spokesman Jay Carney said Wednesday that the administration would not accept any delays to the health care law to avoid a shutdown.
The House plan is likely to be phase one of a weeks-long clash over the federal budget as Democrats look to keep the government open, restore spending cuts known as the sequester, and raise the debt ceiling to allow the government to borrow to pay bills already approved by Congress and incurred. The Republicans, while insisting they also want to keep the government running, look to kill Obamacare and lock in spending cuts.
With no talks underway, the White House Office of Management and Budget asked federal agencies to begin contingency planning for a government shutdown.
"There is enough time for Congress to prevent a lapse in appropriations, and the administration is willing to work with Congress to enact a short-term continuing resolution to fund critical government operations and allow Congress the time to complete the full year 2014 appropriations," Director Sylvia Burwell wrote. "However, prudent management requires that agencies be prepared for the possibility of a lapse."
Pressure mounted from other quarters. In a surprise, the Federal Reserve said Wednesday that it would continue moves to keep interest rates low, saying the economy was too weak to risk raising rates. Chairman Ben Bernanke said "upcoming fiscal debates" weighed on the decision.
In addition, the influential U.S. Chamber of Commerce sent a letter to members warning them of danger if they don't act.
"It is not in the best interest of the U.S. business community or the American people to risk even a brief government shutdown that might trigger disruptive consequences or raise new policy uncertainties washing over the U.S. economy," wrote Bruce Josten, the chamber's executive vice president for government affairs.
Wednesday's events were a sharp escalation from the calm of recent weeks. Most Washington lawmakers thought that any kind of shutdown would rattle the economy, inconvenience constituents and prove politically perilous.
House Republican leaders last week wanted separate votes on a budget and on defunding the 2010 health care law. That way, the Senate could approve the budget but turn down the health care measure, and the government would keep running.
Republicans thought that would give them a double-barrel victory: They could point to senators who voted to keep Obamacare going, but they could also boast they kept the government open.
But Republican conservatives rebelled and House Speaker John Boehner, R-Ohio, changed course.
"We're going to continue to do everything we can to repeal the president's failed health care law," he said after a closed-door meeting with House Republicans. "This week the House will pass a (budget) that locks the sequester savings in and defunds Obamacare." The bill is also expected to allow the government to continue paying bills even if the debt limit is reached.
Democrats painted the House Republican plan as a sellout to the far right. Obama on Wednesday accused a "small faction" of Republicans of extortion for tying budget talks and a vote on raising the debt ceiling to defunding his signature health care plan.
"You have never seen in the history of the United States the debt ceiling or the threat of not raising the debt being used to extort a president or a governing party and trying to force issues that have nothing to do with the budget and nothing to do with the debt," he said.
Obama, who addressed the Republican-leaning Business Roundtable, said he was prepared to negotiate over entitlements and "priorities that the Republicans think we should be promoting and priorities that they think we shouldn't be promoting."
But, he said, "What I will not do is to create a habit, a pattern, whereby the full faith and credit of the United States ends up being a bargaining chip to set policy. It's irresponsible."
Boehner insisted Wednesday he does not want to shut the government down. "There should be no conversation about shutting the government down," he said.
If there's a shutdown, said Sen. Marco Rubio, R-Fla., it will be Obama's fault. "A solution is within sight in order to avert another crisis of Washington's creation," Rubio said. "President Obama and his allies in Congress should abandon their threats of shutting down the government and instead work with Republicans."
Nonsense, Democrats shot back. "The majority of the Republicans that serve on Capitol Hill know that this is unrealistic and unreasonable and I believe that they will prevail," said Sen. Claire McCaskill, D-Mo. "It doesn't help that their potential candidates for president are waving pom-poms on the sidelines yelling, 'Go, go, go!'"
Lindsay Wise of the Washington Bureau contributed.
By David Lightman and Lesley Clark
McClatchy Washington Bureau