Shutdown in 3rd day with Obama, Hill at impasse

By Alan Fram

Associated Press

Published: Thursday, Oct. 3 2013 12:05 p.m. MDT

FILE - In this April 8, 2011 file photo, President Obama poses for photographers in the Blue Room at the White House in Washington after he spoke regarding the budget and averted government shutdown.

Charles Dharapak, File, Associated Press

WASHINGTON — President Barack Obama laid the blame for the government's partial shutdown at the feet of House Speaker John Boehner, escalating a government-shutdown confrontation that was leading headlong into a potentially more damaging clash over the nation's borrowing authority.

Speaking at a construction company in Washington's Maryland suburbs Thursday, Obama cast Boehner as a captive of a small band of conservative Republicans who want to extract concessions in exchange for passing a short term spending bill that would restart the partially shuttered government.

"The only thing preventing people from going back to work and basic research starting back up and farmers and small business owners getting their loans, the only thing that is preventing all that from happening right now, today, in the next five minutes is that Speaker John Boehner won't even let the bill get a yes or no vote because he doesn't want to anger the extremists in his party," Obama said.

The dispute over the shutdown deepened worries about a bigger problem rumbling ever closer — a mid-October deadline for increasing the government's borrowing limit before it runs out of money to pay creditors. The U.S. Treasury warned on Thursday that failure to raise that debt ceiling could spark a new recession even worse than the one Americans are still recovering from.

"The president remains hopeful that common sense will prevail," the White House said in a written statement after an unproductive meeting at the White House about the political standoff that has idled 800,000 federal workers and halted an array of services Americans expect from their government.

Boehner, R-Ohio, complained to reporters that Obama had used the meeting simply to declare anew that he won't negotiate over his health care law.

House Republicans, pushed by a core of tea party conservatives, are insisting that Obama accept changes to the health care law he pushed through Congress three years ago as part of the price for reopening all of government. Obama refuses to consider any deal linking the health care law to routine legislation needed to extend government funding or to raise the nation's debt limit.

"We're probably through negotiating with ourselves," Rep. Jeb Hensarling, R-Texas, chairman of the House Financial Services Committee, said on MSNBC.

Republicans who initially sought to defund the health care law in exchange for funding the rest of government have gradually scaled back their demands but say they need some sort of offer from Obama.

Expressing frustration after the White House meeting, Boehner said: "All we're asking for here is a discussion and fairness for the American people under Obamacare."

The White House said Obama would be happy to talk about health care — but only after Congress moves to reopen the government "and stop the harm this shutdown is causing to the economy and families across the country."

If the shutdown dispute persists it could become entangled with the even more consequential battle over the debt limit. The Obama administration has said Congress must renew the government's authority to borrow money by Oct. 17 or risk a first-ever federal default, which many economists say would dangerously jangle the world economy.

Treasury's report Thursday said defaulting on the nation's debts could cause the nation's credit markets to freeze, the value of the dollar to plummet and U.S. interest rates to skyrocket.

The shutdown stalemate is already rattling investors. Stock markets in the U.S. and overseas faded Wednesday, and Europe's top central banker, Mario Draghi, called the shutdown "a risk if protracted." Leading financial executives met with Obama, and one, Goldman Sachs CEO Lloyd Blankfein, said politicians should not use a potential default "as a cudgel."

Democratic Sen. Claire McCaskill said the House could easily defuse the worsening situation.

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