Obama says Republicans must end 'threats' on fiscal impasse

Obama says Republicans must end 'threats' on fiscal impasse

Obama says Republicans must end threats on fiscal impasse

The US Speaker of the House John Boehner responds to President Barack Obama’s comments at the US Capitol in Washington, DC. AFP photo

President Barack Obama has refused to give ground in a fiscal confrontation with Republicans, saying he would negotiate on budget issues only if they agree to re-open the federal government and raise the debt limit with no conditions.

At a news conference, an unbending Obama said he would not hold talks on ways to end the fiscal impasse while under threat from conservative Republicans, but agreed to discuss anything, including his healthcare plan, if they restore government funding and raise the debt limit.

“If reasonable Republicans want to talk about these things again, I’m ready to head up to the Hill and try,” Obama told reporters. “But I’m not gonna do it until the more extreme parts of the Republican Party stop forcing (House Speaker) John Boehner to issue threats about our economy. We can’t make extortion routine as part of our democracy.”

Obama’s comments followed an earlier phone call to Boehner, who had adopted a slightly
more conciliatory tone in comments to reporters after a meeting with House of Representatives’ Republicans.

‘No boundaries’ in potential talks

Boehner had said there were “no boundaries” in potential talks, and made no mention of recent Republican demands to delay parts of Obama’s healthcare law in return for approving funds to end the government shutdown.

But speaking to reporters after Obama’s news conference, Boehner said he was “disappointed” by the president’s approach. “What the president said today was ‘if there is unconditional surrender by Republicans, he’ll sit down and talk to us.’ That’s not the way our government works,” Boehner said.

The spending and budget impasse has shut down the federal government for nine days and threatens to prevent the raising of the country’s $16.7 trillion borrowing limit before an Oct. 17 deadline identified by Treasury Secretary Jack Lew.

Investors are exhibiting increasing anxiety as the deadline for raising the debt ceiling approaches.
Interest rates on one-month U.S. government debt hit a 5-year peak on Tuesday and the Standard & Poor’s 500 stock index closed down 1.23 percent.

House Republicans proposed the creation of a bipartisan committee to work on the issue, which was rejected by Democrats.

Default legislation in exchange for talks

House Republicans emerged from a morning meeting saying they would insist on deficit-reduction talks with Obama as a condition for raising the federal debt limit, but some signaled they might pass short-term legislation to avert a default in exchange for immediate talks.

“If we have a negotiation and a framework set up, we can probably reach a way to raise the debt ceiling while the negotiation is in progress. But nobody is going to raise it before there is a negotiation,” Republican Representative Tom Cole of Oklahoma said.

The impasse sparked a rising tide of warnings about the potential global economic chaos of a U.S. default, with foreign creditors and the International Monetary Fund’s chief economist warning of the potential consequences.

“I think what could be said is if there was a problem lifting the debt ceiling, it could well be that what is now a recovery would turn into a recession or even worse,” IMF chief economist Olivier Blanchard said.
“The U.S. must avoid a situation where it cannot pay (for its debt) and its triple-A ranking plunges all of a sudden,” Japanese Finance Minister Taro Aso told reporters after a cabinet meeting.

“The U.S. must be fully aware that if that happens, the U.S. would fall into fiscal crisis,” he said in the latest sign that Japan and China, the biggest foreign creditors to the United States, are worried the impasse could harm their trillions of dollars of investments in U.S. Treasury bonds.

Obama said he did not think the crisis would create lasting international damage, saying “folks around the world will attribute this to the usual messy process of American democracy.”

The U.S. Chamber of Commerce, a traditional supporter of pro-business Republicans, said the debt ceiling specifically must pass on a timely basis to avoid inflicting substantial and enduring damage on the U.S. economy,” said Bruce Josten, the executive vice president.