By Richard Cowan, Andy Sullivan, Katharine Jackson and Bo Erickson
WASHINGTON (Reuters) -U.S. lawmakers had less than two days on Thursday to avert a partial government shutdown after President-elect Donald Trump rejected a bipartisan deal and demanded lawmakers address the nation's debt ceiling before he takes office next month.
Trump's fellow Republicans huddled behind closed doors on Capitol Hill to craft a fallback plan that could win his approval and also muster enough support to pass the Republican-controlled House of Representatives and the Democratic-majority Senate. Democratic President Joe Biden also would have to sign it into law to keep the government funded past midnight on Friday (0500 GMT Saturday).
Republican lawmakers provided few details as they emerged from House Speaker Mike Johnson's office.
"The situation is still fluid," Representative Tom Emmer, the chamber's No. 3 Republican, told reporters.
Without action from Congress, the U.S. government will begin a partial shutdown on Saturday that would interrupt funding for everything from air travel to law enforcement in the days leading up to the Dec. 25 Christmas holiday and cut off paychecks for more than 2 million federal workers.
Many government operations, such as Social Security retirement payments, would continue.
The last government shutdown took place in December 2018 and January 2019 during Trump's first White House term.
Republican Representative Nancy Mace said Congress should keep the government closed until Trump takes office if they cannot reach a deal.
"Let's reset Jan. 20th. It's not the scary shutdown the lying media tells you it is," she said on social media.
Trump and his ally Elon Musk, the world's richest person, effectively torpedoed the spending deal on Wednesday by blasting it as a wasteful giveaway to Democrats and threatening to mount primary election challenges to Republicans who vote for it.
Trump is calling on Congress to pass a stripped-down bill that would that would tie up loose ends before he takes office next month by extending the government's borrowing authority - a politically difficult task - and extending government funding.
ABOLISH THE DEBT LIMIT?
On Thursday, Trump told NBC News that Congress should abolish limits on government debt entirely.
That would end the periodic debt showdowns that have pushed the country to the brink of default, but expose lawmakers to charges of fiscal irresponsibility.
At $36 trillion, the federal debt now exceeds the nation's GDP and could grow dramatically under Trump's watch. He is pushing tax cuts that could reduce revenues by $8 trillion over 10 years, which would drive the debt higher without offsetting spending cuts, and he has vowed not to reduce retirement and health benefits for seniors that are projected to grow dramatically in the years to come.
MUSK FACTOR
Democrats have shown little interest in revising their deal to satisfy Trump and Musk, the Tesla (NASDAQ:TSLA) CEO who has vowed to cut $2 trillion from the $6.2 trillion federal budget.
"It is dangerous for House Republicans to have folded to the demands of the richest man on the planet, who nobody elected," Democratic Representative Rosa DeLauro said in a statement. "Republicans own whatever comes next."
The bipartisan bill would have funded government agencies at current levels and provide $100 billion for disaster relief and $10 billion in farm aid. It also included a wide range of unrelated provisions, such as a pay raise for lawmakers and a crackdown on hidden hotel fees.
The unrest also threatened to topple Johnson, a mild-mannered Louisianan who was thrust unexpectedly into the speaker's office last year after the party's right flank voted out then-Speaker Kevin McCarty over a government funding bill. Johnson has repeatedly had to turn to Democrats for help in passing legislation when he has been unable to deliver the votes from his own party.
Several Republicans said they would not vote for him as speaker when Congress returns in January, potentially setting up another tumultuous leadership battle in the weeks before Trump takes office.
"WE MUST STAND FIRM WITH THE AMERICAN PEOPLE TO STOP THE MADNESS!! No matter what. Even if we have to elect new leadership," Republican Representative Marjorie Taylor Greene said on social media.
Trump offered his qualified support for the embattled speaker.
"If the speaker acts decisively, and tough, and gets rid of all of the traps being set by the Democrats, which will economically and, in other ways, destroy our country, he will easily remain speaker," he told Fox News Digital.