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House passes controversial spending bill

House passes controversial spending bill

Thanks in part to a rare alliance between President Barack Obama and Speaker John Boehner, the House voted Thursday to pass a $1.1 trillion spending bill to fund the government, clearing a hurdle to avoid an otherwise imminent government shutdown.

The House also passed a measure that will fund the government for two additional days in order to give the Senate time to approve the legislation before the government runs out of funding on Friday, according to NBC News.

At the eleventh hour, Obama and Boehner scrambled to salvage the bill -- which passed by a vote of 219 to 206 -- amid a Republican revolt over immigration and a Democratic revolt over provisions that would deregulate Wall Street and increase the amount that individual donors can contribute to national political party committees.

With its fate in doubt, President Obama took to the phones to personally lobby Democratic members to vote for the legislation, a development White House spokesman Josh Earnest confirmed to msnbc's Alex Wagner. Obama also spoke to Democratic Minority Leader Nancy Pelosi, who emerged this week as the deal's most prominent antagonist, ahead of a Thursday evening meeting between House Democrats to determine their next move. They were joined by White House chief of staff Dennis McDonough, who argued that the package was the best they could do and funded a number of critical priorities.

Despite the administration's best efforts, Democratic Congressman Steve Israel left the meeting with McDonough convinced that the bill "is not something that most Democrats can support at this point."

House Republican leaders began Thursday confident they had the votes to push through the spending bill, which was negotiated with Senate Democratic leaders, by a small margin. But in a dramatic turn, Boehner only barely managed to pass a procedural motion to advance the bill after Democrats unanimously voted "no" along with 16 Republicans. Republican leaders scrambled to convince enough conservative dissenters to change their votes to "yes" at the last second and it passed with a razor-thin 214-212 vote margin. 

Boehner's difficulty securing support for the procedural vote on the spending agreement, a type of bill known as a continuing resolution, bodes ill for its final passage. A final vote was originally scheduled for 2 p.m., but the House instead went into recess then, suggesting House GOP leaders were not confident they had the support to carry it across the finish line. 

Republicans, facing a backlash over the bill's length, spending levels, and above all its lack of a provision blocking Obama's recent immigration action, may need upwards of dozens of Democrats to make up for Republicans voting against it. But prominent Democrats both in the House and Senate -- among them, Massachusetts Senator Elizabeth Warren -- have urged their caucus to stand firm against the bipartisan bill negotiated with Senate leaders and deny House leaders the necessary votes. 

"We believe the fight is now," Rep. Maxine Waters, the top Democrat on the House Financial Services Committee, told reporters outside of a meeting of Democratic members on Thursday evening to determine the path forward. She urged her colleagues not to "be intimidated by anybody," including the president. 

Waters launched her own whip operation on Thursday to rally Democrats against the bill, which was hammered out by Democratic Sen. Barbara Mikulski and GOP Rep. Hal Rogers, both parties' top appropriators, in defiance of Obama's own lobbying effort. 

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Congressman Steny Hoyer of Maryland, the number-two ranking Democrat in the House, told reporters after the procedural vote that he was undecided on the final spending deal and was waiting for a signal from President Obama in determining how to proceed.  "I want to hear what the president has to say," he said.

The answer came within the hour, as the White House issued a statement supporting the spending deal. While the administration objected to riders watering down regulations on Wall Street and increasing the maximum amount of money donors can give to political parties, they concluded that the tradeoff was worth it to fund the president's health care law through the fiscal year, sidestep a fight over the White House's immigration executive action, bolster funds for combatting Ebola, and prevent a government shutdown.

With Obama's position clear, the vote will be a test of his clout with congressional Democrats, as well as Boehner's with conservatives. 

At the heart of the internal divisions in both the Republican and Democratic party is a debate over which side will have more political leverage next year, when the incoming Republican Senate and a larger House GOP majority are sworn in. 

Participants in Democrats' emergency meeting on Thursday argued both sides. Retiring Congressman Jim Moran sided with the White House, warning that if the caucus didn't accept the current deal, Republicans will have more power next year and strip out funding for cherished Democratic priorities across the board. "Nobody's going to get anything," he said. 

But others suggested that Republicans would face the same divisions between tea party and establishment members they do now that and Democrats would set an important precedent by demonstrating they wouldn't rescue Republican leaders from their own internal dysfunction without a price. 

"We've got to stand up on principle at some point or they're going to kick us even more next year," Democratic Congressman Pete DeFazio of Oregon told reporters.

On the Republican side, Boehner has argued to members that by funding the vast majority of government through the fiscal year, they'll have an easier time forcing concessions on immigration and remove the risk of a risky full-scale shutdown. Critics on the right suspect that they're being set up for a quiet surrender later and argue that Republicans will lose momentum and demoralize the base the longer they delay a confronation. Congressman Steve King of Iowa, a leader of the immigration hardliners, pitched the party on a compromise plan to pass a brief 60-day extension of government funding with a symbolic immigration measure attached to allow them to continue the fight immediately after the new Congress is sworn in. 

The unusual partnership between Boehner and Obama faces its toughest opposition on the left from Pelosi, who told reporters on Thursday that she was "enormously disappointed" in Obama's decision to back away from a fight over the riders. In an open letter to her caucus, Pelosi argued to members that Republicans lacked the votes to pass a bill on their own and that Democrats should withhold their votes unless they could remove the offending language.

"However you decide to vote in the end, I thank those who continue to give us leverage to improve the bill," Pelosi wrote, referring to members who were resisting calls to support the continuing resolution.

The proposed changes to the Wall Street reform law would allow banks to trade types of derivatives, a complex financial product heavily involved in the 2008 financial crisis, via institutions that are insured by taxpayer dollars. Progressive lawmakers and activists argue that the proposed changes will put taxpayers on the hook for another bailout if investors make risky bets using derivatives that again go bad en masse. The rollback would benefit banks directly, as trading derivatives in subsidiaries insured by the federal government is more profitable.

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"It's more billions of dollars in subsidies for Wall Street — it's morally reprehensible," Sen. Sherrod Brown, Democrat of Ohio, told reporters on Thursday. "They're saying government bailouts are back," he added. 

"I think the special interest groups, particularly the Wall Street banks, are salivating at the thought of the new Congress and want to park themselves under the mistletoe when it comes to this bill, and I have real problems with that," said Sen. Dick Durbin, a member of the Democratic leadership, though he said he was undecided about whether to support the bill.

"It's more billions of dollars in subsidies for Wall Street — it's morally reprehensible."'

The Wall Street provision is one that many House Democrats have supported in the past: In October 2013, 70 House Democrats voted to relax new regulations of complex derivatives known as swaps, which banks use to hedge risk. Supporters of the change say that the regulation will actually increase risk by forcing Wall Street to move swaps activity from subsidiaries with government-insured deposits to those that are subject to less oversight.

The GOP leadership is hoping that they will have enough Democrats on board to pass the legislation as is, which also includes more 2015 funding for financial oversight agencies — a new concession included in the bill released on Tuesday.

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"I expect this bill will receive bipartisan support and pass. Remember this bill was put together in a bicameral, bipartisan way, and there is no member who should have objection to it," Boehner said on Thursday.

Boehner sought to fend off an uprising from the right over immigration by crafting a budget deal that funds most of the government through September 2015, but included only short-term funding for the Department of Homeland Security that would allow Republicans to threaten a partial shutdown early next year to fight the White House action, which is expected to protect millions of undocumented immigrants from deportation. Prominent conservative groups like Heritage Action want Republicans to make their move on immigration now, however, and are putting pressure on House Republicans to buck leadership and vote "no."

At that point, congressional Democrats would lose the small amount of leverage they currently have to wring concessions from Republicans. But it could also set up a big intramural fight early on in the new Republican Congress: If Congress has to negotiate an entire budget at that point, it would raise the possibility of a potential shutdown fight early in 2015, particularly if immigration and funding for Homeland Security becomes a rallying cry for conservatives again.

Separately, the House voted on Wednesday to extend a terrorism risk insurance program through 2020, which passed on a 417-7 vote. The bill also included a tweak to the Dodd-Frank Wall Street Reform Act that exempts non-banks — including manufacturers, farmers and others — from certain regulations on swaps transactions that are used to hedge risk.

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Supporters describe it as a “technical fix” that clarifies the original intent of the law, unlike the far more dramatic provision in the bigger spending bill. It has attracted significant Democratic support in the pass.

Sen. Chuck Schumer, however, slammed the inclusion of the provision and rejected the idea that the terrorism risk bill would pass easily in the Senate. And the White House says that it “strongly opposes” the inclusion of the Dodd-Frank change in the terrorism risk insurance bill but has stopped short of a veto threat. “This bill should not be used as a vehicle to add entirely unrelated financial regulatory provisions,” the administration said in a statement.

Americans for Financial Reform, a pro-reform advocacy group, opposes the end-user change for stripping regulators of the authority to demand collateral if necessary, which could put the financial system at unnecessary risk. "Without such authority, regulators will be unable to address buildups of unmargined derivatives risk even if they determine it is a threat either to the safety and soundness of an individual dealer or to the financial system as a whole," the group wrote in a 2013 letter opposing the change.

Correction: An earlier version erroneously attributed a quote to Rep. Steve Womack. It has been removed.