US president Barack Obama turned up the political pressure on Republicans today, saying he would be willing to negotiate on budget issues only after they agree to re-open the federal government and raise the debt limit with no conditions.
At a news conference, an unbending Mr Obama said he would not hold talks on ways to end the fiscal impasse under threat from “more extreme parts of the Republican Party.”
"If reasonable Republicans want to talk about these things again, I'm ready to head up to the Hill and try," Mr 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."
Mr Obama’s comments followed an earlier phone call to Mr Boehner, who had adopted a slightly more conciliatory tone in comments to reporters after a meeting with House Republicans. “There are no boundaries here. There’s nothing on the table, there’s nothing off the table,” Mr Boehner said, making no mention of his recent demands to delay parts of Mr Obama’s healthcare law in return for approving funds to end the government shutdown.
House Republicans emerged from their meeting saying they would insist on deficit-reduction talks with Mr 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 bitter fiscal stalemate has shut down the federal government for eight days and threatens to prevent the raising of the country’s $16.7 trillion borrowing limit before an October 17th deadline identified by treasury secretary Jack Lew. The possibility the government could default on its debt sparked fears of potential global economic havoc, 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.
Mr Obama said he did not think the crisis would create lasting international damage. “As I said, if we deal with this the way we should, then, you know, folks around the world will attribute this to the usual messy process of American democracy but it doesn’t do lasting damage.” The normally uneventful sale of one-month US Treasury debt turned into a near-boycott today, with investors demanding the highest yields in five years as fears intensified over a possible default if the federal debt ceiling is not increased.
The US treasury department today sold $30 billion of one-month bills that will pay an interest rate of 0.35 per cent to investors. This was the highest one-month federal borrowing cost since October 2008 when markets worldwide were roiled by the global credit crisis.
The high yield failed to stoke demand. The total amount bid relative to the size of the offering came in at a ratio of 2.75 to 1, lowest since March 2009. “Until you see some progress, things will likely get worse,” said Eric Green, global head of rates, currency and commodity research and strategy at TD Securities in New York.
Republican US Senator John McCain today said he opposes a demand byMr Obama and his Democrats in Congress for an unconditional increase in the US debt limit.
Mr 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.
Mr 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 US borrowing authority.