US govt shutdown: Wall Street should be worried, Obama tells CNBC

**New York:**President Barack Obama went on CNBC on Wednesday and cleverly worked the interview to put pressure on House Speaker John Boehner and the Republicans by turning Wall Street against the party that they fund by talking up the potential impact of the US government shutdown.

CNBC’s Washington correspondent John Harwood scored a sit-down with the president on the second day of a government shutdown and asked if Wall Street was correct to react calmly to the political impasse.

“No, I think this time’s different. I think they should be concerned. I had a chance to speak to some of the financial industry who came down for their typical trip, and I told them that it is not unusual for Democrats and Republicans to disagree. That’s the way the founders designed our government,” Obama told CNBC.

“Democracy’s messy, but when you have a situation in which a faction is willing potentially to default on US government obligations then we are in trouble. If they’re willing to do it now, they’ll be willing to do it later,” he added.

On the first day of the shutdown on Tuesday US investors stayed calm and sent the stock market modestly higher. On Wednesday, the Dow Jones Industrial Average dropped 58.56 points or 0.4 percent to 15133.14 on concern over the shutdown. Traders said that Wednesday’s losses reflected most investors waiting out the stalemate, rather than fleeing the market or cutting back on their exposure to riskier assets.

Obama went on CNBC for a reason. He was intentionally reaching out to Wall Street to put heat on the House Republicans by saying the political stalemate in Washington could have profound effects on the economy. It could work given the fact that Wall Street’s biggest firms generously back the Republican Party and have Republican House Speaker Boehner’s ears.

Obama said the only thing that is preventing Boehner from bringing legislation to a vote is that he has “not been willing to say no to a faction of the Republican Party that are willing to burn the house down because of an obsession over my health care initiative.”

“I am exasperated with the idea that unless I say that 20 million people, ‘you can’t have health insurance, they will not reopen the government.’ That is irresponsible,” he said.

“If we get into the habit where one party is allowed to extort concessions based on a threat of undermining the full faith and credit of the United States, then any president who comes after me…will find themselves unable to govern effectively,” Obama said.

“One thing I know that the American people are tired of, and I have to assume businesses are tired of, is this constant governing from crisis to crisis,” Obama said.

Republicans have voted to repeal Obamacare more than 40 times and said they want to dismantle parts of the 2010 health law, the Affordable Care Act in exchange for voting in favour of funding the government and raising the nation’s debt ceiling.

Watch video of Obama interview below. Mobile users can click on this link here. :

Obama has insisted he won’t negotiate over either, but said if Republicans fund the government and raise the debt ceiling he is willing to negotiate with them on a host of issues.

Funding to keep the federal government running expired on Monday midnight as the two parties and the White House stuck to their positions. Republican leaders refused to fund the government unless funding for Obamacare was yanked at the same time. And that’s a nonstarter for Obama and Democrats, who see health-care reform as settled law, ratified by the Supreme Court and a presidential election, that the public may not love but has little desire to re-litigate.

Polls consistently show that Americans aren’t happy with Obamacare. They think the law will make health care more expensive, and decrease its quality.

The long-running dispute on Capitol Hill over President Obama’s health care law caused a partisan deadlock over the US budget, forcing about 800,000 federal workers off the job, closing museums and national parks and suspending all but essential services.

More problems down the road

The lack of negotiations between the two parties and the White House raises the possibility that the partisan divisions that have brought the US government to a standstill could impede the ability of the Treasury to pay the government’s bills beyond mid-October.

Congress has to approve an increase in the federal debt ceiling by then, and failure to do so could bring more troublesome consequences for the US and global economies than the partial US government shutdown. Ultimately, a prolonged shutdown will weaken the US economy and this would impact Indian exporters - from farmers to factory owners - who are hoping to reap the benefits of a weak rupee.

The US Congress failed to come to a bipartisan agreement on raising the debt limit in August 2011 endangering America’s credit rating. After the bitter fight in Congress over raising the debt limit in the summer of 2011, Standard & Poor’s downgraded the US government’s credit rating to AA+ from AAA.