National News

October 8, 2013

Debt limit overtaking shutdown as US crisis focus

WASHINGTON — A possible national default loomed closer on Monday as the partial government shutdown lingered, rattling markets in the U.S. and overseas. A gridlocked Congress betrayed little or no urgency toward resolving either of the threats.

Stocks got a case of the jitters on Wall Street, and halfway around the world China stressed the importance for the international economy of raising the U.S. debt limit.

“Safeguarding the debt is of vital importance to the economy of the U.S. and the world,” Vice Finance Minister Zhu Guangyao said, according to the official Xinhua News Agency. China holds $1.277 trillion in U.S. Treasury bonds, second only to Japan.

At home, the political rhetoric was unchanged — and generally uncompromising — while a new poll suggested Republicans are paying a heavier price than Democrats for the deadlock.

President Barack Obama said the House should vote immediately on ending the partial closure of the federal establishment. He accused House Speaker John Boehner of refusing to permit the necessary legislation to come to the floor because he “doesn’t apparently want to see the ... shutdown end at the moment, unless he’s able to extract concessions that don’t have anything to do with the budget.”

Boehner, in rebuttal, called on Obama to agree to negotiations on changes in the nation’s health care overhaul and steps to curb deficits, the principal GOP demands for ending the shutdown and eliminating the threat of default.

“Really, Mr. President. It’s time to have that conversation before our economy is put further at risk,” the Ohio Republican said in remarks on the House floor.

Obama said he would talk with the Republicans on those topics or virtually any others. But the White House has said repeatedly the president will not negotiate until the government is fully re-opened and the debt limit has been raised to stave off the nation’s first-ever default.

White House aide Jason Furman told reporters that if Boehner “needs to have some talking point for his caucus that’s consistent with us not negotiating ... that’s not adding a bunch of extraneous conditions, of course he’s welcome to figure out whatever talking point he wants that helps him sell something.”

The current standoff is the latest in a string of clashes over the past three years between Obama and a House Republican majority that has steered to the right with the rise of the tea party.

Most Democrats and many Republicans have assumed the GOP will pay a heavier price for a shutdown than the Democrats, since that was the case in 1996.

And a survey released by the Washington Post-ABC said disapproval of Republicans was measured at 70 percent, up from 63 percent a week earlier. Disapproval of Obama’s role was statistically unchanged at 51 percent.

In the Senate, where majority Democrats forced approval of legislation before the shutdown aimed at preventing it, officials said Majority Leader Harry Reid was drafting a bill to raise the current $16.7 trillion debt ceiling before the Oct. 17 deadline when Treasury Secretary Jacob Lew has said the government will reach its borrowing limit.

The measure would allow the government to meet its borrowing needs through the 2014 elections, officials said, although few details were immediately available.

Assuming Democratic support, the bill could pass the Senate quickly if Republicans merely vote against it as they press for concessions from the White House. But passage could be delayed until Oct. 17 if the GOP decides to mount a filibuster.

Separately, a White House aide said Obama would be receptive to an interim, short-term measure to prevent default.

In the House, Republicans declined to say when they would put debt limit legislation on the floor for a vote.

Instead, the public agenda for the day consisted of legislation to reopen the Food and Drug Administration, the latest in a string of measures to soften the impact of the partial shutdown. The measure was approved 235-162.

Earlier House-passed bills would end the shutdown at national parks, the National Guard and Reserves and the Women, Infants and Children nutrition program, and ease effects for the Washington, D.C., government, among other locations. Each of the measures cleared the House with some Democratic support.

Yet each is under a veto threat by the White House, and Reid opposes them in the Senate as far less than the full restoration of government services that most Democrats favor.

Still, the shutdown eased over the weekend, when about 350,000 civilian defense workers were recalled as the result of legislation Congress passed and Obama signed after the shutdown began.

That left an estimated 450,000 federal employees idle at agencies responsible for domestic programs, ranging from the Departments of Education to Energy, and including Labor, Health and Human Services, Interior, Transportation and more.

The shutdown was felt unevenly, however, because of bewilderingly complex rules and the ability of senior officials to declare some projects essential and therefore allowed to remain open.

Some routine food checks by the FDA were suspended, but the Department of Agriculture’s meat inspections continued uninterrupted. Much of the nation’s space agency was shuttered, although work continued on plans to launch a robotic probe to Mars, which has a once-every-two-years launch window.

Despite the order returning civilian Pentagon workers to their government jobs, defense contractor Lockheed Martin announced it would furlough about 2,400.

Top defense officials noted that despite the recall of most civilians, and the resumption of many activities across the Defense Department, there are critical programs and benefits that remain halted, according to a Pentagon report on their meeting with Defense Secretary Chuck Hagel.

For example, the department does not currently have the authority to pay death gratuities for the survivors of service members killed in action - typically a cash payment of $100,000 paid within three days of the death of a service member.

The Federal Emergency Management Agency, where Obama visited, served as a demonstration for the variable impact of the partial shutdown.

Officials said the agency had furloughed about 86 percent of its workers, then had recalled about 200 of them last week to prepare for the threat posed by Tropical Storm Karen in the Gulf Coast region.

With the threat passed, Obama said at least 100 of them have been re-furloughed.

“That’s no way of doing business,” he said.

Whatever the shutdown’s inconveniences, it was easily rivaled by the warnings over a default, in which the United States would not be able to pay all its bills.

“A default would be unprecedented and has the potential to be catastrophic,” a Treasury report said. “Credit markets could freeze, the value of the dollar could plummet, U.S. interest rates could skyrocket, the negative spillovers could reverberate around the world.”

Private economists generally agree that a default on the U.S. debt would be extremely harmful, especially if the impasse was not resolved quickly.

Lew has said that while Treasury expects to have $30 billion of cash on hand on Oct. 17, that money would be quickly exhausted in paying incoming bills given that the government’s payments can run up to $60 billion on a single day.

———

Associated Press writers Martin Crutsinger, Jim Kuhnhenn, Donna Cassata and Alan Fram contributed to this story.

 

1
Text Only
National News
  • Remembering an officer slain after bombs went off

    Like many other youngsters, Sean Collier wanted to be a police officer. Unlike most, he brought that dream to life — and then died doing it, becoming a central character in one of the most gripping manhunts the nation has ever seen.

    April 18, 2014

  • Gabriel Garcia Marquez, Nobel laureate, dies at 87

    Nobel laureate Gabriel Garcia Marquez crafted intoxicating fiction from the fatalism, fantasy, cruelty and heroics of the world that set his mind churning as a child growing up on Colombia’s Caribbean coast.

    April 18, 2014

  • 10 Things to Know for Friday

    Your daily look at late-breaking news, upcoming events and the stories that will be talked about Friday.

    April 17, 2014

  • Why high oil prices are actually good for airlines

    Airline executives frequently complain about fuel costs. But the truth is higher prices actually have been good for business.

    April 17, 2014

  • Armed robber was never told to report to prison

    After he was convicted of armed robbery in 2000, Cornealious Anderson was sentenced to 13 years behind bars and told to await instructions on when and where to report to prison. But those instructions never came.

    April 17, 2014

  • Hot models at this year’s New York Auto Show

    With more than 1 million visitors annually, the New York International Auto Show is one of the most important shows for the U.S. auto industry. Here are some of the vehicles debuting this year. The show opens to the public Friday.

    April 17, 2014

  • Study: Diabetic heart attacks and strokes falling

    In the midst of the diabetes epidemic, a glimmer of good news: Heart attacks, strokes and other complications from the disease are plummeting.

    April 17, 2014

  • 10 Things to Know for Thursday

    Your daily look at late-breaking news, upcoming events and the stories that will be talked about Thursday:

    April 17, 2014

  • Players protest rehiring of fired Minnesota coach

    The University of Minnesota-Mankato football team Wednesday boycotted the fired head coach who won his job back in an arbitrator's ruling last week, nearly two years after fighting accusations of child pornography and other misconduct.

    April 16, 2014

  • A year after background check defeat, modest goals

    Democratic worries about this November’s elections, a lack of Senate votes and House opposition are forcing congressional gun-control supporters to significantly winnow their 2014 agenda, a year after lawmakers scuttled President Barack Obama’s effort to pass new curbs on firearms.

    April 16, 2014