US Republicans to offer short-term debt increase in return for talks

Thursday 10 October 2013 17.41
World Bank President Jim Yong Kim has added his voice to a chorus of experts warning about the impact of the fiscal stalemate in the US
World Bank President Jim Yong Kim has added his voice to a chorus of experts warning about the impact of the fiscal stalemate in the US

US Republicans will offer President Barack Obama a short-term increase in the federal debt limit if he agrees to negotiate with them on a broad range of fiscal issues, including funding to reopen the government.

The plan to extend US borrowing capacity would be conditioned on Democrats entering negotiations, which they have previously refused to do, Republican lawmakers said.

"What we want to do is to offer the president today the ability to move a temporary increase in the debt ceiling in agreement to go to conference on the budget," House Speaker John Boehner said after presenting the plan to Republican lawmakers.

How long the increase might suffice - a few weeks or a few months - was unclear.

But agreement by Republicans and Democrats to raise the debt ceiling would at least stave off a possible default after October 17, when Treasury Secretary Jack Lew has determined the US will no longer be able to borrow.

President Barack Obama has said he would accept a debt ceiling increase of limited duration as long as no strings were attached.

It remains unclear how far Republicans might be prepared to go to meet Obama's conditions.

Republicans in the House have been demanding a variety of conditions - including changes to Obama's healthcare law - in return for cooperating on the debt ceiling and on a funding measure that might reopen the government, which has been partially shut down since October 1.

In recent days, however, Republican emphasis has shifted more toward deficit reduction measures and less to Obamacare, the health care law.

Republicans in particular and Congress in general have taken a public beating in the showdown, with an Associated Press-Gfk survey yesterday showing Congress as a whole at a rock-bottom 5% approval rating. More than six of every 10 Americans blamed Republicans for the impasse.

With pressure rising and no clear path forward for breaking their fiscal impasse, Obama launched a series of White House meetings with lawmakers yesterday to search for a way to end a government shutdown and raise the debt limit.

House Democrats journeyed to the White House to discuss the fiscal stalemate, and Senate Democrats and Republican leaders in the House of Representatives will make separate treks today amid rising worries about the potential for economic havoc in the crisis.

The depth of the dispute was evident, however, in the failure of Obama and House Speaker John Boehner to even agree on a guest list for today's session.

The impasse has shut the government for nine days and rattled financial markets with the threat that the country's $16.7 trillion borrowing limit will not be raised before the October 17 deadline.

World Bank President Jim Yong Kim added his voice to a chorus of experts warning about the impact of the stalemate, saying yesterday that even the threat of a US default could hurt emerging markets and the world's most vulnerable people.

"We're very concerned. Because right now there's so many headwinds as it is for emerging markets and the developing world, that kind of impact really could be devastating," Kim said.