Obama to hold meetings over US government shutdown

Wednesday 02 October 2013 17.54
US government shutdown enters second day
US government shutdown enters second day

US President Barack Obama will meet the four top leaders of Congress later to urge lawmakers to reopen the government and raise the US debt ceiling, a White House official said.

Obama will meet with Republican Speaker of the House of Representatives John Boehner, House Democratic leader Nancy Pelosi, Senate Majority Leader Harry Reid and Senate Republican leader Mitch McConnell.

Obama will urge the House to pass a "clean" bill to re-open the US government, the official said.

Boehner's office said the meeting would be the start of serious talks to bridge differences that led to government agencies closing down.

Obama is also due to meet top bank chief executives to discuss the government shutdown and the looming deadline to raise the US debt limit.

Bank chiefs included Lloyd Blankfein of Goldman Sachs, Michael Corbat of Citigroup, Jamie Dimon of JPMorgan Chase & Co and Brian Moynihan of Bank of America.

Also due to attend the meeting with the president and vice president Joe Biden are Robert Benmosche of AIG, James Gorman of Morgan Stanley and John Stumpf of Wells Fargo, among others.

President Obama has scrapped part of a trip to Asia and left the remainder of the trip in doubt as the US government shutdown went into a second day with no end in sight to the funding battle in Congress that triggered it.

Not only must he deal with the budget impasse and its effects, but he faces an even bigger crunch in Congress, which will put the US at risk of defaulting on its debts if it does not raise the limit on public debt.

Treasury Secretary Jack Lew has said the US will exhaust its borrowing authority no later than October 17.

The fight between Obama's Democrats and the Republicans over the government's borrowing power is rapidly merging with the standoff over everyday funding, which has forced the first government shutdown in 17 years and sent hundreds of thousands of federal employees on unpaid leave.

The White House announcements about the Asia trip followed a fruitless day on Capitol Hill, with congressional Democrats and Republicans coming no closer to resolving their differences.

Obama accused Republicans of taking the government hostage to sabotage his signature healthcare law, the most ambitious US social programme in five decades, passed three years ago.

Republicans in the House of Representatives view the Affordable Care Act as a dangerous extension of government power, and have coupled their efforts to undermine it with continued efforts to block government funding. The Democratic-controlled Senate has repeatedly rejected those efforts.

As police cordoned off landmarks such as the Lincoln Memorial, and government agencies stopped activities ranging from cancer treatments to trade negotiations, Republicans in the House sought to restore funding to national parks, veterans' care and the District of Columbia, the capital.

Gallery: US national parks and monuments shut

Stock investors today appeared to show growing anxiety on over the standoff after taking the news in stride yesterday, with Wall Street opening lower today.

A short-term shutdown would slow US economic growth by about 0.2 percentage points, Goldman Sachs said today, but a week long disruption could weigh more heavily - 0.4 percentage points - as laid of workers scale back personal spending.

The last shutdown in 1995 and 1996 cost taxpayers $1.4 billion, according to congressional researchers.

The political crisis has raised fresh concern about whether Congress can meet a mid-October deadline to raise the government's $16.7 trillion debt ceiling. Some Republicans see that vote as another opportunity to undercut Obama's healthcare law.

Failure to raise the debt limit would force the US to default on its obligations, dealing a blow to the economy and sending shockwaves around global markets. A 2011 standoff over the debt ceiling hammered consumer confidence and prompted a first-ever downgrade of the US credit rating.

Analysts say this time it could be worse. Lawmakers back then were fighting over how best to reduce trillion-dollar budget deficits, but this time they are at loggerheads over an issue that does not lend itself to compromise as easily: an expansion of government-supported health benefits to millions of uninsured Americans.