A possible national default loomed closer on Monday as the partial government shutdown lingered, rattling markets in the U.S. and overseas.
With a gridlocked Congress showing no urgency about resolving either of the threats, stocks got a case of the jitters, with the Dow Jones Industrial Average shedding more than 130 points. Halfway around the world, China, which holds holds $1.28 trillion in U.S. Treasury bonds, stressed the importance for the international economy of raising the U.S. debt limit.
At home, though, the political rhetoric was unchanged.
President Barack Obama, visiting the Federal Emergency Management Agency, said the House should vote immediately on ending the partial closure of the government. He accused House Speaker John Boehner of refusing to permit the necessary legislation to come to the floor because he “doesn’t apparently want to see the … shutdown end at the moment, unless he’s able to extract concessions that don’t have anything to do with the budget.”
Boehner, in rebuttal, called on Obama to agree to negotiations on changes in the nation’s health care overhaul and steps to curb deficits.
“Really, Mr. President. It’s time to have that conversation before our economy is put further at risk,” he said in remarks on the House floor.
Obama said he would talk with the Republicans on those topics or virtually any others. But the White House has said repeatedly the president will not negotiate until the government is fully re-opened and the debt limit has been raised to stave off what would be the nation’s first-ever default.
In the Senate, officials said Majority Leader Harry Reid was drafting a bill to raise the current $16.7 trillion debt ceiling before Oct. 17, when Treasury Secretary Jacob Lew has said the government will reach its borrowing limit.
The measure would allow the government to meet its borrowing needs through the 2014 elections, officials said, although few details were immediately available.
Assuming Democratic support, the bill could pass the Senate quickly if the minority Republicans merely vote against it. But it could be delayed if the GOP decides to mount a filibuster.
Separately, a White House aide said Obama would be receptive to an interim, short-term measure to prevent default.
In the House, Republicans declined to say when they would put debt limit legislation on the floor for a vote. Instead, the public agenda for the day consisted of legislation to reopen the Food and Drug Administration, the latest in a string of measures to soften the impact of the partial shutdown.
Earlier House-passed bills would end the shutdown at national parks, the National Guard and Reserves and the Women, Infants and Children nutrition program, and ease effects for the Washington, D.C., government. Each of the measures cleared the House with some Democratic support.
Yet each is under a veto threat by the White House, and Reid opposes them as a piecemeal approach that is far less than the full restoration of government services Senate Democrats favor.
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The partial shutdown is being felt unevenly because of bewilderingly complex rules and the ability of senior officials to declare some projects essential.
Some routine food checks by the FDA were suspended, but the Department of Agriculture’s meat inspections continued uninterrupted. Much of the nation’s space agency was shuttered, although work continued on plans to launch a robotic probe to Mars, which has a once-every-two-years launch window.
FEMA, where Obama visited, served as a demonstration of the shutdown’s variable impact. Officials said the agency had furloughed about 86 percent of its workers, then had recalled about 200 of them last week to prepare for the threat posed by Tropical Storm Karen in the Gulf Coast region.
With the threat past, Obama said at least 100 of them had been re-furloughed.
“That’s no way of doing business,” he said.
Whatever the shutdown’s inconveniences, it was easily rivaled by the warnings over a default, in which the United States would not be able to pay all its bills.
“A default would be unprecedented and has the potential to be catastrophic,” a Treasury report said. “Credit markets could freeze, the value of the dollar could plummet, U.S. interest rates could skyrocket, the negative spillovers could reverberate around the world.”
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Private economists generally agree that a default on the U.S. debt would be extremely harmful, especially if the impasse was not resolved quickly.
Lew has said that while Treasury expects to have $30 billion of cash on hand on Oct. 17, that money would be quickly exhausted in paying incoming bills given that the government’s payments can run up to $60 billion on a single day.