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Washington still in gridlock 11 days before shutdown deadline

Washington is engrossed in a familiar fiscal standoff that threatens a slowly-improving economy, with no solution on the horizon just 11 days before the government runs out of money and all but the most essential services are shuttered.

This autumn's crisis is just the latest in a series of showdowns that have plagued the capital over the past three years, contributing to the nation’s anemic economic recovery. There’s also a separate deadline sometime in mid-October, when the government will max out its borrowing limit. And although the stock market currently shows few signs of concern and is posting record gains, if that limit isn’t extended, the prospect of a default on the nation's debt threatens wide-ranging consequences for the entire economy.

Locked at an impasse, House Republican leaders must now cobble together a new, workable solution that can win the support of President Barack Obama, his Democratic allies in Congress and a badly-divided GOP. In the past, congressional leaders and the White House have failed to craft a long-term plan, leading to a series of stopgap measures which have lasted for only a few months at a time. It’s the reason these two deadlines are looming.

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A complex matrix of variables shape the current standoff, chief among them an internal struggle among Republicans over whether to use the specter of a government shutdown – or, more gravely, a default on the national debt next month – as a final leverage point to do away with the Affordable Care Act before it takes effect on Oct. 1. The GOP is torn between living up to its commitment to fight Obamacare, and the political toll Republicans would suffer in face of a government shutdown.

Still, Congress offered little hope Thursday of reaching an agreement to avert a shutdown.

House Republicans will cast their lot Friday, when they are poised to approve a measure that would continue government spending, but also eradicate funding for the enactment of the health care law – even though Obama flatly said Thursday that he would veto the legislation.

“When it comes to the health care law, the debate in the House has been settled,” Boehner said Friday, vowing to push ahead with the surely-doomed approach.

Obama on Wednesday called this strategy, favored by hard-lined conservatives, the “primary roadblock to resolving the budget.”

With no solution in sight, the gridlock threatens to imperil or reverse the sluggish recovery from the 2008-09 recession and financial crisis. The Federal Reserve took action on Wednesday to continue its stimulus efforts, in part due to concerns that Congress might not resolve its differences this time. And even the U.S. Chamber of Commerce, an organization traditionally warm to Republicans, warned lawmakers this week that “it is not in the best interest of the U.S. business community or the American people to risk even a brief government shutdown.”

Still, Boehner signaled that the House GOP has no intention of backing off its legislation, saying it’s up to the Democratic-controlled Senate to figure out a solution.

“This fight will move over to the Senate, where it belongs,” he said. “I expect my Senate colleagues will be up to the challenge.”

For their part, the Democrats’ leader in the Senate – who have long said they would strip the Obamacare provision from the patchwork legislation – expressed his skepticism that the House would even manage to approve the legislation.

“Let’s wait and see what they send us,” Majority Leader Harry Reid, D-Nev., said Thursday. “It’s a moving target over there; we’ve heard all sorts of rumors that they don’t have the votes, that they’re going to come up with another strategy.”

If history is any guide, a handful of moderate Republicans in the Senate will join with the majority Democrats to craft some last-minute agreement to avert a shutdown. But the GOP’s internal divisions have made the already-tough task of legislating even more difficult.

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Boehner, for instance, had to pull a more modest government spending proposal earlier this month when conservative lawmakers, who have vowed to vote against any bill which doesn’t eradicate health care reform, balked.

If Boehner were to proceed with a vote on legislation sent back from the Senate, it would almost certainly require help from Democrats. And on Thursday, Minority Leader Nancy Pelosi, D-Calif., hardly committed to helping her Republican colleagues.

“If they strip that out [the Obamcare provision], we'll see what they do after that,” she said at her weekly press conference.

Even if Congress manages to avert a government shutdown in time, though, the more difficult question of raising the debt limit will present itself to lawmakers sometime next month. Though Obama has vowed not to negotiate over the debt limit, Republicans have suggested they might seek concessions in exchange for their votes – ranging from a one-year delay of Obamacare to approval for the proposed Keystone XL Oil Pipeline project.

The House GOP will meet Friday morning to discuss that vexing issue. “After that conversation, we'll probably have more to say,” Boehner said.

And Reid said he was only focused on the more immediate threat of a government shutdown – for now.

“We can speculate all we can here,” he said of how House Republicans might approach the debt limit. “ I don’t know, they don’t know. So it’s silly to be talking about that at this stage.”