Obama, Congressional Leaders Still Deadlocked on Shutdown

For the third day the federal government has locked out its employees. The military, homeland security and others remain open., a photo by Pan-African News Wire File Photos on Flickr.

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Obama, congressional leaders still deadlocked on shutdown

Tribune staff and wire reports
8:51 PM CDT, October 2, 2013

WASHINGTON - President Barack Obama met with Republican and Democratic leaders in Congress on Wednesday to try to break a budget deadlock that has shut wide swaths of the federal government, but there was no breakthrough and both sides blamed each other.

After more than an hour of talks, House of Representatives Speaker John Boehner said Obama refused to negotiate, while House Democratic Leader Nancy Pelosi and Senate Majority Leader Harry Reid accused Republicans of trying to hold the president hostage over Obamacare.

Reid said Obama told Republicans "he will not stand" for their tactics. The White House later issued a statement saying that Obama remains hopeful that "common sense will prevail."

There was little to encourage hope for a quick solution to the two-day-old shutdown and hundreds of thousands of federal employees remained off the job without pay.

Leaders of the Republican-controlled House of Representatives and the Democratic-led Senate offered token concessions that were quickly dismissed by the other side. Obama, meanwhile, scaled back a long-planned trip to Asia.

Republicans have tried to tie continued government funding to measures that would undercut Obama's signature healthcare law. Obama and his Democrats say that is a non-starter.

"The president reiterated one more time that he will not negotiate," Boehner told reporters after the White House meeting. "All we're asking for here is a discussion and fairness for the American people under Obamacare."

Reid said Democrats were willing to discuss any way to tackle the budget after a temporary funding bill is passed. "We're through playing these little games," he said.

"My friend John Boehner ... cannot take yes for an answer," he told reporters.

The shutdown, which took effect Monday at midnight, has raised questions about Washington's ability to carry out its most essential duties.

Though it would do relatively little damage to the world's largest economy in the short term, global markets could be roiled if Congress also fails to raise the debt limit before borrowing authority runs out in coming weeks.

The shutdown has closed landmarks like the Grand Canyon, cut off government economic data reports and prevented some cancer patients from receiving cutting-edge treatment.

United Technologies Corp, which makes Sikorsky helicopters and other items for the military, said it would be forced to furlough as many as 4,000 employees if the U.S. government shutdown continues through next week, due to the absence of government quality inspectors.

BIGGER FIGHT LOOMS

The shutdown fight is rapidly merging with a higher-stakes battle over the government's borrowing power that is expected to come to a head soon.

Treasury Secretary Jack Lew has said the United States will exhaust its borrowing authority no later than Oct. 17. The government could have difficulty paying pension checks, interest charges and other bills after that point.

Essentially resigned that they will be unable to win support from House Republicans for a no-strings bill to fund the government, the House Republican leadership has clearly shifted to the next battle: the debt ceiling. That all but ensures a prolonged government shutdown as Republicans seek a deal aiming at the Oct. 17 deadline to raise the debt ceiling or face a potentially catastrophic default.

Top House Republicans have begun working on demands the GOP will make in exchange for raising the debt limit and reopening government, according to those familiar with the internal strategy.

Knowing that a delay of Obamacare remains unlikely to be accepted by the president, Republicans are expected to revisit the components of past budget battles: cuts to Medicare, Social Security and other entitlement programs, as well as reforming the tax code, a long-standing interest.

They may also seek to gain administration approval of the Keystone XL pipeline between Canada and the United States and pursue smaller changes to the healthcare law, including the repeal of the tax on medical-device makers and an end to the individual patient advisory board.

But several business groups said trying to use the debt ceiling to extract concessions could lead to financial disaster.

"You can re-litigate these policy issues in a political forum, but they shouldn't use the threat of causing the U.S. to fail on its ... obligations to repay on its debt as a cudgel," Goldman Sachs chief executive Lloyd Blankfein told reporters after he and other financial-industry executives met with Obama.

Stock investors on Wednesday appeared to show growing anxiety over the standoff after taking the news in stride on Tuesday. The Standard & Poor's 500 Index .SPX was down 0.32 percent and the Nasdaq Composite Index .IXIC was down 0.22 percent.

A short-term shutdown would slow U.S. economic growth by about 0.2 percentage points, Goldman Sachs said on Wednesday, but a weeks-long disruption could weigh more heavily - 0.4 percentage points - as furloughed workers scale back personal spending.

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