Obama summons congressional leaders to White House over shutdown

Washington: President Barack Obama summoned the top four leaders of Congress to the White House on Wednesday for the first high-level talks on reopening the US government and raising the debt ceiling.

add_main_imageObama invited House speaker John Boehner, Senate majority leader Harry Reid, Senate minority leader Mitch McConnell and House minority leader Nancy Pelosi, a White House official said on condition of anonymity.

The US government started a partial shutdown on Tuesday and must raise the US debt limit this month to ensure the government has enough money to pay all its bills. The official said Obama will continue to insist on a short-term spending bill and debt limit increase without policy conditions.NextMAds

We’re pleased the president finally recognizes that his refusal to negotiate is indefensible, said Brendan Buck, a spokesman for Boehner.

House Republicans are seeking a way out of the impasse, today flinging five proposals for partial funding at the Democrats and seeking to engage the Senate and Obama in direct talks. All five measures are expected to come to the House floor on Wednesday and drew immediate veto threats from the White House.

On the list are the three measures that failed to win enough votes through an expedited process on Tuesday that would reopen parks and the Department of Veterans Affairs and allow Washington’s city government to spend its money.

Another two — funding for the National Institutes of Health and to pay the National Guard and Reserve forces — are also set to be considered.

Visible effects

The move is designed to blunt some of the most visible effects of the shutdown and compel Democrats to choose between popular programs and their insistence on a full resumption of government funding.sixthMAds

We’re going to stay here and keep working, putting more options on the table to continue funding government, while also ending the sweetheart deals in Obamacare, said Representative Steve Scalise, a Louisiana Republican.

Calling the Republicans’ ideas cockamamie, Reid said on Wednesday the Senate will reject the piecemeal approach driven by what he called modern-day anarchists in the House.

It’s time for my Republican colleagues to do a gut check, he said, urging a vote on a spending bill without policy conditions attached.

Stocks fell and Treasuries rose, a day after as many as 800,000 federal workers were sent home with no paychecks and parks and other services were shuttered across the country.

The Standard & Poor’s 500 Index slid 0.8% as of 10:14 am in New York. The benchmark 10-year Treasury yield fell five basis points to 2.60%. The dollar weakened versus 12 of 16 major currencies.

Obama trip

White House officials announced on Wednesday that Obama is shortening his planned trip for meetings with leaders in Asia, canceling stops in Malaysia and the Philippines because of the shutdown.

Senate Democrats have rejected the Republican ideas as political theater and insisting that Republicans fund the whole government temporarily and stop demanding major changes in Obama’s Affordable Care Act. Obama had harsh words for the Republicans on Tuesday, saying they had demanded ransom just for doing their job of passing a budget.

Health exchanges

The shutdown coincided with the first day of enrollment for the health-care law, as new exchanges tried to handle of flood of consumer interest. Republicans called computer glitches a sign the measure, passed in 2010, isn’t workable. Obama said the demand shows the law — which House Republicans have sought to defund or delay — is important and popular.

Treasury market volatility increased by the most in six weeks on Tuesday. Price swings as measured by the Merrill Lynch Option Volatility Estimate Index jumped 9% as the gauge advanced for a fifth day, the longest run of increases in four weeks. The index was at 87.37, versus the average of 69 for the past year.

The furlough of about 800,000 federal employees and the closing of offices, parks and museums may cost the US at least $300 million a day in lost economic output at the start, according to IHS Inc.

Though that’s a fraction of the country’s $15.7 trillion annual economy, the effects may multiply over time as consumers and businesses defer purchases and other spending plans.

Both sides are jockeying for the political high ground in the standoff. Democrats said the nation was being taken hostage by the Republicans’ Tea Party faction, while the Republicans faulted Senate Democrats and Obama for being unwilling to negotiate over any proposal to delay or curtail the health-care act.

Spending level

Unlike past fiscal feuds, this dispute is more about the health law than the overall amount of government spending. Democrats say they have already made a concession by accepting spending levels set under the across-the-board cuts known as sequestration, which first went into effect earlier this year and were part of the deal to avoid a 2011 default.

The US budget deficit in June was 4.3% of gross domestic product, down from 10.1% in February 2010 and the narrowest since November 2008, when Obama was elected to his first term, according to data compiled by Bloomberg from the Treasury Department and the Bureau of Economic Analysis.

House Republicans are divided between the hard-liners insisting on confrontation over the health-care law and at least 13 others who say they would support the Senate Democrats’ spending bill, which would end the shutdown without conditions attached.

Democratic support

Democrats are counting on the split to force Boehner to allow a vote on that short-term spending bill, which probably would pass with the support of most Democrats and some Republicans.

Most people view this as irresponsible and reckless with a lot of victims, including America’s economy, said Senator Richard Durbin, an Illinois Democrat. The moderate Republicans are starting to feel the heat. If they’ll step up, we might bring this to an end.

The effects of the partial government include the closure of Internal Revenue Service call centers. Also, more than 90% of Environmental Protection Agency workers are off work.

Octogenarian veterans ignored barricades around the World War II memorial on Washington’s Mall on Tuesday to view the outdoor site. National parks and museums, though, will stay shuttered.

Head Start

Head Start programs covering almost 19,000 children across the country lost funding, according to Sally Aman, a spokeswoman for the Alexandria, Virginia-based National Head Start Association.

The US military academies suspended intercollegiate athletics and the Centers for Disease Control and NIH were sent home many of their workers.

Other services will continue uninterrupted. Social Security and Medicare benefits will be paid. US troops will remain at their posts around the world and will be paid under a bill Obama signed on 30 September. Air-traffic controllers and airport security screeners will keep working. BLOOMBERG