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Reuters' Richard Cowen reports: As the U.S. government moved into the second week of a shutdown on Monday with no end in sight, a deadlocked U.S. Congress also confronted an October 17 deadline to increase the nation's borrowing power or risk default.
The last big confrontation over the debt ceiling, in August, 2011, ended with an eleventh-hour agreement under pressure from shaken markets and warnings of an economic catastrophe if a default were allowed to occur.
A similar last-minute resolution remained a distinct possibility this time as well.
READ: U.S. Congress enters crucial week in battles over budget, debt limit
Global economic systems react to the second week of the partial U.S. federal government shutdown:
Mexican stocks fell more than 1 percent on Monday on concerns over the continued U.S. government shutdown and political fighting over the debt ceiling limit.
A lack of progress by U.S. lawmakers in budget and debt ceiling talks rattled investors on Monday, sending European shares to a four-month low and pushing the dollar and oil down. Low-risk euro zone bonds inched up on Monday, with investors nervous about the lack of progress in resolving the U.S. budget standoff as a mid-October deadline for raising Washington's debt ceiling approaches.
Finland's European Affairs and Foreign Trade Minister Alexander Stubb said the global economic impact of the shutdown was worrying: "To be quite honest, what the Republicans are doing in the U.S. right now, especially conservative Republicans, is irresponsible from a global perspective. ... They're trying to get a short-term political gain which might hit both the United States and the rest of the world economically."
South Africa's finance minister said the global community should fear the worst over the U.S. debt crisis and shore up its economic defenses accordingly.
Moody's Investors Service said on Monday the credit outlook for local governments in Maryland and Virginia close to Washington, D.C., is negative due to the federal furlough of some employees during the current budget shutdown.
Notes: President Obama's remarks on the federal shutdown at FEMA
President Obama called on House Republican leadership to bring a "clean" government funding bill in remarks on Monday at the Federal Emergency Management Agency (FEMA) and urged Congress to raise debt limit and avoid default. President Obama says FEMA job has been made more difficult by government shutdown, adding that FEMA will refurlough 100 workers who had been recalled to help with tropical storm preparation.
Obama said he is happy to talk to Republicans about anything but not under the threat of shutdown or default, saying there are enough Republican and Democratic votes in the House to end the shutdown. He called for the House to bring a floor vote today.
Obama said it is his "very strong suspicion" that there is enough support in the House to pass a clean continuing resolution (CR) to reopen the federal government, telling reporters that the House should "call a vote right now. Let's see what happens."
Obama is "eager" to sit down with Republicans to talk about health care and other issues once the debt limit is raised, stating that Democrats have already compromised by accepting Republican demands about spending levels that are lower than Democrats would have otherwise liked.
After making a statement to reiterate the White House's request that House GOP leadership put a "clean" continuing resolution on the floor, Press Secretary Jay Carney takes a question about House Speaker John Boehner's challenges within his own Republican party in getting internal support for bringing such a resolution to a vote.
Carney states that the GOP and Boehner insist on "getting something out" of the negotiations, and President Obama says that such a deal would put the stability of U.S. economy at risk in the long term.
Senator Mitch McConnell (R-KY) follows Senator Harry Reid's (D-NV) remarks.
McConnell suggests that Congress should work to pass mini-funding bills "on the parts" both parties can agree on: eight bills which President Obama says he will veto in lieu of a "clean" (AKA comprehensive, but separate from changed to the Affordable Healthcare Act or the debt ceiling) continuing resolution on the federal budget.
Senator McConnell: "the problem is the Senate... negotiation isn't a luxury, it's a necessity... there's a time for politics... time for sitting down and working things out."
Steps to the U.S. House of Representatives at the U.S. Capitol in Washington October 7, 2013.
As the U.S. Government shut down enters its 7th day, U.S. House of Representatives Speaker John Boehner said that there is "no way" Republican lawmakers will agree to a measure to raise the nation's debt ceiling unless it includes conditions to rein in deficit spending. REUTERS/Jason Reed
U.S. Senator Mitch McConnell's statements on Monday
New report by Richard Cowan: Republican Senator Rob Portman was circulating a plan to cut federal spending and reform the U.S. tax code as part of a plan to reopen shuttered government agencies and provide the Treasury Department with more borrowing authority in order to avoid a default.
A Senate Republican aide, who asked not to be identified, said that Portman's proposals were in an early stage with no guarantees that they would gain traction in a Congress deadlocked over budget and debt challenges. While Democratic lawmakers and House of Representatives Republicans also were being consulted, the idea faced a major hurdle.
President Barack Obama and his Democratic colleagues in Congress have insisted that there be no negotiations over longer-term budget and tax issues until a week-long government shutdown is ended and the $16.7 trillion debt limit, which could be breached around Oct. 17, is raised by Congress. Nevertheless, as House Speaker John Boehner, a Republican, and Senate Majority Leader Harry Reid, a Democrat, traded stern barbs, Portman's overtures were one of the first signs of a lawmaker working on a plan that was intended to solve Washington's fiscal crisis. Under the proposal, Obama would win a full year of government funding, instead of a short-term spending bill lasting several weeks that would have to be renegotiated in November or December, the aide said.
Republicans would get the strict across-the-board spending cuts that currently are in place, which many liberal Democrats, and some more centrist Republicans, want to scrap. The remaining piece of the puzzle would be instructions to tax-writing committees in Congress to write legislation by next year to reform the tax code in a way that would help further grow the U.S. economy. The aide said that Portman, an Ohio Republican, has floated the idea to other Republican senators, including Senate Republican leader Mitch McConnell, as well as some Democrats.
Reuters Patricia Zengerle (@ReutersZengerle) reports on shutdown hashtags on Twitter:
The various sides in the government budget and shutdown standoff are trying to score political points on Twitter – and they have the hashtags to prove it.
Here are some samples:
#JustVote : Used by Democrats to push for a vote on the so-called “clean CR”
#LetsTalk: Used by Republicans to push the idea that Democrats won’t negotiate)
#HonorFlight and #LettheVetsIn – Pushed by Republicans to promote the shutdown-related closure of the World War Two Memorial on the National Mall, which Republicans see as bad publicity for congressional Democrats and the White House
#MakeDCListen – begun by supporters of Republican Sen. Ted Cruz, during his filibuster and back during the weekend to blame “Washington,” i.e. the Democrats.
#HarryReidsShutdown – Used by Republicans to blame Senate Majority leader Harry Reid.
#GOPshutdown – Used by Democrats to blame Republicans
#TeaPartyshutdown – Used by Democrats to blame the Tea Party.
#SpeakerCruz – used by Democrats to push the idea that Cruz, not Speaker John Boehner, is running the House of Representatives
Some are less explicitly political:
#NoBudgetNoPants and #PantsShutdown – a less-reverent take on the standoff from Anonymous
#Shutnado – an invention by stir-crazy journalists to combine the tornado watch for Washington on Monday, the shutdown and a reference to “Sharknado,” a recent television movie in which the country was threatened by tornadoes loaded with sharks.
None of the shutdown-related hashtags, except the simple #shutdown – is a top trend in the United States, or even in Washington, D.C., although #SingleBecause is.
When could the debt ceiling put the United States in default?
The United States is careening toward what could be a calamitous default on its debt because of political dysfunction in Washington. The Treasury said it will hit the nation's $16.7 trillion debt cap by October 17.
How could the United States default? How long will the money last? How would default affect the economy? Is there an easy way out of this?
Read Reuters Jason Lange's Factbox on what will happen if the U.S. defaults.
From the Pew Research Center: Nearly a week into the first government shutdown in more than 17 years, most Americans express frustration and concern about the situation. Yet on the core issue dividing Republicans and Democrats in Washington – whether cuts or delays to the 2010 health care law should be part of any budget deal – there is little support for compromise among members of either party. Read a full summary of the recent Pew poll: www.people-press.org
New piece by Reuters By Genevra Pittman: Most Americans don’t want the government to decide if medical treatments are economical before letting patients use them, a new survey suggests.
READ: Americans: don't weigh costs of new treatments
Editor's Note: you can now like individual posts on Reuters live blogs. Simply refresh the page to see a button for likes. We will use this information to help understand what content our readers like... literally.
Reuters David Lawder reports: U.S. House Speaker John Boehner renewed his call on Tuesday for deficit-reduction talks with President Barack Obama and signalled that the discussions would be wide open: "There is nothing on the table, there's nothing off the table," Boehner told reporters, adding there was "no line in the sand."
Boehner spoke to reporters after a meeting with Republican members of the House of Representatives. Members emerged from the meeting saying they would insist on deficit-reduction negotiations with Obama as a condition for raising the federal debt limit. The U.S. Treasury expects to exhaust all of its remaining borrowing capacity under the current $16.7 trillion cap by Oct. 17.
U.S. House Republicans seek new deficit-reduction panel:
Reuters Richard Cowan reports that U.S. House Republicans unveiled a proposal on Tuesday to establish a bipartisan, 20-member committee to make recommendations on a debt-limit increase and look at ways to rein in the country's deficits. Under the proposed legislation, the Republican-dominated House would name 10 members to the panel while the Democratic-led Senate would name the other 10. The panel would also make recommendations on a measure to fund the government for the 2014 fiscal year, ending a shutdown of federal agencies now in its eighth day. The committee's recommendations would need the support from a majority of members to move forward.
Different sides of the same conversation between House Speaker Boehner and President Obama
Reporting by Roberta Rampton and Jeff Mason
A statement by the White House stated that, on a phone call Tuesday morning, President Obama told Republican Speaker of the House of Representatives John Boehner he would be willing to negotiate with Republicans once the U.S. government is re-opened and the threat of a default is lifted.
Obama urged Boehner to allow a "timely up-or-down vote in the House to raise the debt limit with no ideological strings attached," the White House said, adding: "He noted that only Congress has the authority to raise the debt limit and failure to do so would have grave consequences for middle-class families and the American economy as a whole."
However, earlier in the day on Tuesday a spokesman for House Republican Speaker John Boehner said that President Obama won't negotiate on a government funding bill or debt limit increase:
"The president called the Speaker again today to reiterate that he won't negotiate on a government funding bill or debt limit increase," said Brendan Buck, a Boehner spokesman, noting the call took place around 10:45 a.m.
U.S. Democratic Senator Charles "Chuck" Schumer dismissed a proposal by House Republicans to set up a bipartisan panel to negotiate deficit reduction, which Republicans want linked to a debt limit increase.
Republicans also want to link the panel's negotiations to a promise to pay essential federal workers on time.
"They keep coming up with new gimmicks. We've done the supercommittee before and it failed," Senator Charles Schumer, the third-ranking Democrat in the Senate, told reporters.
Senator Schumer reiterated a "simple plea" to Republicans that they allow an immediate reopening of the entire U.S. government, which is in the eighth day of partial shut down, and a U.S. debt ceiling increase.
"And then we'll discuss anything they (Republicans) want in a forum in which they want to discuss it," Schumer said.
Readers, much has already happened on Tuesday, the eighth day of the partial U.S. federal government shutdown.
You'll find our most updated stories here on the blog. Right now we are watching how House and Senate Democrats and Republicans negotiate what type of federal spending bill they approve, as well as how the address the separate issue of raising the debt ceiling.
In Photos: Scene of a Shutdown, Day EightU.S. House Speaker John Boehner and House Majority Leader Eric Cantor at a press conference following a House Republican party meeting on Capitol Hill, October 8, 2013. REUTERS/Jason Reedby Margarita Noriega (Reuters)U.S. House Speaker John Boehner (R-OH) on Capitol Hill in Washington, October 8, 2013. REUTERS/Jason Reedby Margarita Noriega (Reuters)U.S. Senate Majority Leader Harry Reid (D-NV) returns to his office after speaking on the Senate floor at the U.S. Capitol, October 8, 2013. REUTERS/Jonathan Ernstby Margarita Noriega (Reuters)PreviousNext
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Center for American Progress graphic shows a history of offered plans on U.S. federal budget spending limits.
If Republicans are looking for a reduction in federal spending in order to negotiate on raising borrowing authority, what types of reductions -- and in what areas -- are they looking for?
The Washington Post reports that House Speaker "Boehner would not specify what he wants in negotiations with the president. In response to questions, he declined to say whether he would support a short-term increase of the debt ceiling or to spell out the level of spending cuts he would support."
Politico reports Democrats feel Republicans already agreed to a $986 billion budget (see below graphic), but "Boehner and his Republican majority performed a 'classic bait-and-switch operation' that led to a government shutdown.
"Senate Majority Leader Harry Reid has for days now divulged details of a private meeting between him and Boehner in September in which Reid says Boehner promised to pass a bill funding the government at lower spending levels than preferred by Democrats on the condition that it not water down Obamacare. The Senate has sent such a bill over to the House, but Boehner has declined to put it on the floor and said if he did, it wouldn’t have the votes to pass."
Reuters Richard Cowan and Thomas Ferraro write that "Republicans emerged from the House meeting saying they would insist that deficit-reduction talks with Obama as a condition for raising the federal debt limit. Republicans are considering legislation to create a new panel to find deficit reductions... "This committee would be similar to a failed 2011 "supercommittee"... that was asked to find trillions of new budget savings."
In summary, all we know of right now is that Republicans want to form a committee to discuss unknown "reductions."
READER COMMENT: May I suggest a poll on the debt limit , with three options, deal before oct 17, deal after oct 17 but before default and deal after default? And leave it open for the next days, until a deal is reached to see how the opinions shift.
In remarks at the White House on Tuesday, President Obama says that Republicans are using the threat of a U.S. default to attempt to gain leverage in federal budget negotiations, saying that House and Senate Democrats have negotiated and are willing to discuss and resolve differences, but Republicans are playing a have-all-or-nothing strategy.
President Obama rejected the notion that defaulting would not be "a big deal."
Obama said that missing foreign events like APEC makes it look like "we don't have our act together."
President Obama ducks answering how exactly the government will negotiate which bills to pay in the event of a U.S. default, but says that the administration is exploring "all contingencies" in case of default.
Quorum is present in Senate, 84-14 on live quorum call. Reid now speaking on floor about shutdown.by Chad Pergram via twitter edited by Margarita Noriega (Reuters) 10/8/2013 6:36:41 PM
Reuters' Roberta Rampton, asking President Obama about economic consequences and foreign relationships. Obama tells Roberta: "we've been through this before... most world leaders understand it... what you haven't seen before... is that one party in Congress might blow the whole thing up of they don't get their way, and that does make them nervous." Obama makes a reference to a failed congressional supercommittee process on budget negotiations in 2013. Continuing, the president added that he worries about the long-term impact of a U.S. default, though there are short term options he is looking at.
An interesting follow up question on the U.S.' foreign reputation and trade negotiations, specifically in Asia. Obama replied saying that "we don't know" what impact will come out of him not attending APEC.
Replying to a question on Thursday, President Obama says that U.S. Treasury Secretary Lew will make prepared remarks to the Senate on the legal implications of a U.S. default and debt prioritization -- or the process by which the government would use to decide which bills to pay before others, so to speak.
Remarking on the Republican supercommittee idea we summarized earlier, Obama says U.S. Congress can use "whatever process they want" to discuess budget negotiations, but he wonders if Republicans are "holding out for" an opportunity whereby Democrats would be forced to give more during negotiations.
"If that's the theory... it's not going to work," Obama says.
White House Chief of Staff Denis McDonough arrives to meet with House Democratic leadership. The Democratic Caucus meeting later this pm.by Chad Pergram via twitter edited by Margarita Noriega (Reuters) 10/8/2013 8:09:05 PM
President Obama visited FEMA Headquarters in washington, D.C. to thank employees for their work responding to weather events around the country and discuss the ongoing government shutdown. October 7, 2013.
U.S. stocks slid on Tuesday as traders cashed in gains in some of the year's best performers amid little progress to end a political crisis in Washington:
- Dow Jones down 158.75 points, or 1.06 percent, at 14,777.49
- Standard & Poor's down 20.61 points, or 1.23 percent, at 1,655.51
- Nasdaq down 75.54 points, or 2.00 percent, at 3,694.83
Reuters Thomas Ferraro reports: Republican U.S. Senator John McCain on Tuesday said he opposes a demand by President Barack Obama and his Democrats in Congress for an unconditional increase in the U.S. debt limit. McCain, one of the more influential members of Congress, said, "The answer to this is negotiations."
Democrats had been citing McCain as a possible key vote to get their debt limit bill passed in the Senate. McCain, the Republican 2008 presidential nominee, told reporters Republicans must go into negotiations with a plan of what they want in return for raising the U.S. borrowing authority.
Reuters Tim Reid reports: Harry Reid, the Democratic leader in the U.S. Senate, said he will introduce a "clean" bill later on Tuesday to raise America's debt limit.
Reid said the bill will have no policy demands from either party attached to it. The bill will have "no strings attached," Reid said.
“It’s time for us, members of this august body, to stand before the American people and publicly discuss the path forward,” Reid said on the Senate floor.by ReutersPolitics via twitter edited by Margarita Noriega (Reuters) 10/8/2013 8:23:03 PM
Latest news from Reuters:
- House Republicans offer new plan in fiscal standoff
- Senate Democrats prepare bill to increase borrowing authority
- U.S. in fiscal deadlock, but glimmers of hope emerge
- What default? Republicans downplay impact of U.S. debt limit
ATHENS/FRANKFURT - Greece's combative finance minister resigned on Monday, removing one major obstacle to any deal to keep Athens in the euro zone after Greeks voted resoundingly to back the government in rejecting the austerity terms of a bailout. | Video