Washington: Stock markets fell Monday as the federal government shutdown entered its seventh day with no end in sight and the prospect of a U.S. default loomed.
Lawmakers appeared to be making little headway in raising the U.S. debt ceiling, after the top Republican in Congress ruled out any measure to boost the nation's borrowing authority without concessions from President Barack Obama.
The U.S. must increase its debt ceiling by Oct. 17 or face the possibility of defaulting on its debts, a move that would shake the global economy and financial markets.
Most analysts believe a deal between Republicans in Congress and the White House to avoid default would be reached together in time, but investors are nervous.
Treasury Secretary Jack Lew warned Sunday that the budget brinkmanship was "playing with fire" and implored Congress to pass legislation to re-open the government and increase the nation's $16.7 trillion debt limit. Lew reiterated that Obama has no intention to link either bill to Republican demands for spending cuts and changes in the 3-year-old health care law.
A defiant John Boehner, Republican Speaker of the House of Representatives, insisted that Obama must negotiate if the president wants to end the shutdown and avert a default that could trigger a financial crisis and recession that would echo 2008 or worse. The 2008 financial crisis plunged the country into the worst recession since the Great Depression of the 1930s.
Boehner also said he lacks the votes to pass a temporary spending bill that would keep the government operating.
The No. 2 House Democrat said fear among moderate Republicans about the party's conservative tea party wing was extending the impasse.
Congressman Steny Hoyer said he believes 140 to 160 of the 232 House Republicans "think what's being done right now is irrational." Hoyer told MSNBC Monday these lawmakers are "looking over their shoulders" at potential primary challenges from tea party-backed candidates.
Hoyer said Republican friends have told him privately that they don't understand the uncompromising position taken by the more conservative members of their caucus, lawmakers who have fallen into line with Texas Sen. Ted Cruz and others.
Hoyer said the partial government shutdown now in effect is different from past closures "because this is a tactic. This is not a result of the inability to get an agreement."
Cruz, a force in pushing Republicans to link changes to the health care law in exchange for keeping the government running, spelled out his conditions for raising the borrowing authority.
The shutdown has pushed hundreds of thousands of workers off the job, closed national parks and museums and stopped an array of government services.
The one bright spot on Monday is a significant chunk of the furloughed federal workforce is headed back to work. Defense Secretary Chuck Hagel ordered nearly 350,000 back on the job, basing his decision on a Pentagon interpretation of a law called the Pay Our Military Act.
Those who remain at home or are working without paychecks are a step closer to getting back pay once the partial government shutdown ends. The Senate could act this week on the measure that passed the House unanimously on Saturday.
Democrats insist that Republicans could easily open the government if Boehner simply allows a straightforward vote on the emergency spending bill. Democrats argue that their 200 members in the House plus close to two dozen pragmatic Republicans would back such a bill, but the Speaker remains hamstrung by tea party conservatives.
In a series of Sunday television appearances, Lew warned that on Oct. 17, he exhausts the bookkeeping maneuvers he has been using to keep borrowing.
Lew said that while Treasury expects to have $30 billion of cash on hand on Oct. 17, that money will be quickly exhausted in paying incoming bills given that the government's payments can run up to $60 billion on a single day.
Treasury issued a report on Thursday detailing in stark terms what could happen if the government actually defaulted on its obligations to service the national debt.
Published Date: Oct 07, 2013 06:07 pm | Updated Date: Oct 07, 2013 06:07 pm