* Top priority is to avoid blame for a government shutdown
* May link raising debt limit to Obamacare, tax reform, Keystone
* Republicans aim to use sequester as leverage
Republican plans for tackling two looming fiscal battles began to take shape this week as House of Representatives leaders made clear they want to pass a temporary measure to avoid a possible government shutdown while pushing for U.S. budget austerity.
With lawmakers away in their home districts for the summer 7break, Republican leaders have been weighing their approach to two upcoming budget standoffs with President Barack Obama - over the annual spending bill and the impending debt limit increase.
Republicans came away bruised from fights over the two issues in the past. Aides said no final decisions have been made and it may take a few weeks to hammer out a strategy that could be embraced by a party known for its fractiousness.
House Speaker John Boehner used a conference call with members on Thursday to brief them on the ideas being considered, and how best to use the confrontations to put pressure on the Democratic president.
The options include using a deadline in November for raising the nation's borrowing limit as leverage to push Republican causes. Their main priorities are weakening Obama's signature healthcare changes, securing broad tax reforms and getting Obama to approve the Keystone XL oil pipeline from Canada and the northern states to Texas Gulf refineries.
Boehner's immediate priority is to avoid a political backlash should Republicans and Obama fail to agree on a budget by Oct. 1.
Without a deal, the government would shut down. Republican leaders fear their party would end up getting blamed, leading to disastrous results in the 2014 congressional elections.
GOVERNMENT SHUTDOWN THREAT
Boehner emphasized on the conference call that he wanted to move quickly when Congress returns to Washington on Sept. 9, and pass a short-term measure that would keep the government funded for about two months past the Oct. 1 deadline.
That would not only avert the threat of a government shutdown but also mean the fight over spending for the next fiscal year would coincide with the second major confrontation -- over raising the limit on the country's borrowing.
"I think it's a very good strategy for the (Republican Party) to avoid a shutdown," said Greg Valliere, chief political strategist with Potomac Research Group.
"It's the one thing that could jeopardize their control of the House and their chances (of taking over the Senate). So why not dump all the issues into a debt ceiling fight? I think that's the way Boehner will go."
But whether the Republican rank-and-file will go with Boehner on that strategy is another question entirely.
Eighty House members, led by Congressman Mark Meadows of North Carolina, have signed a letter to the speaker urging him to back a strategy of the conservative Tea Party movement to threat a government shutdown to try to gut funding for the healthcare reforms.
It is also unclear whether the Democrat-led Senate would vote in favor of a short-term funding bill.
When asked if Senate Majority Leader Harry Reid would allow his chamber to vote on Boehner's tentative proposal, a Reid aide said: "First, the House actually has to pass it."
BARGAINING OVER SPENDING CUTS
Boehner sees automatic spending cuts, known as the "sequester" that were put in place earlier this year, as one area where Republicans have leverage.
Well aware of differences even among Republicans over whether to ease up on some of the cuts, Boehner urged lawmakers to stand firm on that issue which many Republicans view as a strong point for bargaining with Obama.
"The president is desperate to get rid of the sequester," Boehner said. "Our message will remain clear: until the president agrees to better cuts and reforms that help grow the economy and put us on path to a balanced budget, his sequester - the sequester he himself proposed, insisted on, and signed into law - stays in place."
Budget fights hold plenty of political dangers for both Obama and House Republicans. Boehner on the call reminded House members of the damage their party suffered when the government shut down in 1995-1996.
Some conservative House lawmakers view the results of that shutdown differently, arguing that it led to budget reforms.
In a fight over the debt limit in the summer of 2011, Republicans got a large share of the blame when financial markets sank amid fears that the country could suffer a first-ever default on its credit obligations.
A last-minute deal was reached, but the country's gold-plated credit rating took a hit. Though Obama did not emerge from the standoff unscathed, many Americans perceived Republicans to be too eager to provoke a fight.
In the 2012 showdown over what was known as the "fiscal cliff" of tax hikes and budget cuts, Boehner's failure to unite Republicans behind a strategy reinforced a perception of dysfunction within his caucus.
Congressman Tom Cole, a Republican of Oklahoma and Boehner ally, said there was a suggestion on Thursday's conference call of another conversation sometime before the recess ends. "We need to have more discussions," he said.