US shutdown: Barack Obama warns of default danger
Obama: "Absolutely, I am exasperated because this is entirely unnecessary"
US
President Barack Obama has warned that Wall Street should be concerned
that a conservative faction of Republicans is willing to allow the
country to default on its debt.
The US government has partially closed after Congress failed
to agree a budget and will run out of cash on 17 October unless its debt
ceiling is raised. In a TV interview on Wednesday, Mr Obama said he was "exasperated".
John Boehner (Republican) and Nancy Pelosi (Democrat) both spoke after the talks
The US government closed non-essential operations on Tuesday after Congress failed to strike a deal on a new budget.
Republicans and Democrats are blaming each other for the impasse.
The shutdown has left more than 700,000 employees on unpaid leave and closed national parks, tourist sites, government websites, office buildings, and more.
However, as one budget crisis raged in Washington DC, another one - potentially more dangerous - loomed in the coming weeks.
On 17 October, the US government will run out of cash to pay its bills unless the debt ceiling is raised.
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All the signs are that neither side is preparing to blink, quite yet. But while the president is staring hard and straight ahead, the Republicans' eyes are beginning to water, and they are glancing at the ground. ”
On both issues, the Republicans
who control the House of Representatives have demanded concessions from
Mr Obama and his fellow Democrats in return for funding the government's
continued operation and for raising the debt ceiling.
Chiefly, the Republicans demand the repeal, delay or
defunding of a healthcare reform law - dubbed Obamacare - passed by the
Democrats in 2010.Major portions of that law, which was subsequently validated by the US Supreme Court and was a major issue in the 2012 presidential election, took effect on Tuesday.
'Profound impact' On Wednesday, Mr Obama met the heads of some of Wall Street's biggest banks - including JPMorgan Chase, Goldman Sachs and Bank of America - to discuss the debt ceiling and other economic issues.
James Clapper: "This seriously damages our ability to protect the safety and security of this nation"
Following the meeting, Mr Obama told CNBC "it's important for them to recognise that this is going to have a profound impact on our economy and their bottom lines".
Mr Obama also said he was unwilling to negotiate "with the extremist wing of one party" as the 17 October deadline neared.
"The message I have for the [Congressional] leaders is, as soon as we get a clean piece of legislation that reopens the government... until we get that done, until we make sure that Congress allows [the Department of the Treasury] to pay for things that Congress itself already authorised, we are not going to engage in a series of negotiations," he said.
As foreign markets anxiously monitored the US budget crisis, European Central Bank chief Mario Draghi warned that a protracted shutdown was "a risk not only for the US, but also the world economy".
'Asking for fairness' On Wednesday evening Mr Obama met Republican House Speaker John Boehner, as well as Senate Republican leader Mitch McConnell, Democratic Senate Majority Leader Harry Reid and House Minority Leader Nancy Pelosi at the White House.
Mr Boehner later left the talks complaining that the Democrats would not negotiate.
"All we're asking for here is a discussion and fairness for the American people under Obamacare,'' he told reporters.
Nancy Pelosi, however, accused the Republicans of "moving the goalposts" on the budget deal.
Harry Reid said Democrats were "locked in tight on Obamacare'' and neither the president nor Democrats in Congress would accept changes to the law as the price for a deal on reopening the government.
The view on the shutdown from deserted landmarks and government buildings in Washington and New York
But doing so would risk his standing with the most conservative elements of his caucus.
Earlier on Wednesday, senior US intelligence officials warned the shutdown of the government seriously damaged the ability of spy agencies to protect the US.
Director of National Intelligence James Clapper told a Senate panel that an estimated 70% of intelligence workers had been placed on unpaid leave.
Also on Wednesday, the White House announced Mr Obama would cut short a planned four-nation tour of Asia next week.
He will attend regional summits in Indonesia and Brunei, but skip Malaysia and the Philippines due to the government shutdown.
The US government ceased operations deemed non-essential at midnight on Tuesday, when the previous budget expired.
National parks and Washington's Smithsonian museums are closed, pension and veterans' benefit cheques will be delayed, and visa and passport applications will go unprocessed.
However, members of the military will be paid.
- Department of State will be able to operate for limited time
- Department of Defense will continue military operations
- Department of Education will still distribute $22bn (£13.6bn) to public schools, but staffing is expected to be severely hit
- Department of Energy - 12,700 staff expected to be sent home, with 1,113 remaining to oversee nuclear arsenal
- Department of Health and Human Services expected to send home more than half of staff
- The Federal Reserve, Department of Homeland Security, and Department of Justice will see little or no disruption
- US Postal Services continue as normal
- Smithsonian institutions, museums, zoos and many national parks closed
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