President Barack Obama rejected the “ideological demands” from what he called a faction of congressional Republicans who are putting the U.S. economic recovery at risk by threatening a government shutdown.
Failing to fund government operations “would throw a wrench into the gears of our economy,” Obama said today at the White House. “The idea of putting the American people’s hard-earned progress at risk is the height of irresponsibility, and it doesn’t have to happen.”
Obama spoke just before meeting with his cabinet to discuss the impact of a possible government shutdown and as both parties in Congress remain deadlocked. Without a compromise by midnight -- the end of the fiscal year -- much of the U.S. government will run out of spending authority and federal operations will partially shut down for the first time in 17 years.
Republicans, who have a majority in the House, are trying to hobble the Affordable Care Act, Obama’s signature health-care law, as the price for agreeing to fund government operations. Their proposals have been rejected by Obama and the Democrats, who have a majority in the Senate. There were no signs of a last-minute deal.
The White House Office of Management and Budget, facing its own procedural deadline, must determine by 11:30 p.m. Washington time whether to instruct agencies to begin implementing their shutdown plans after midnight, according to an Obama administration official familiar with the planning who asked not to be identified.
The House voted 228-201 to pass its third version of a short-term extension of government funding in the past 10 days. Each linked averting a shutdown to major changes to the 2010 Affordable Care Act, and each drew veto threats from Obama.
About an hour later, the Senate rejected that plan on a 54-46 vote, putting pressure on Boehner and the Republicans.
While saying he’s willing to negotiate modifications to improve the 2010 law known as Obamacare, Obama said the Republicans were making a futile attempt to block it.
“This is a law that passed both Houses of Congress, a law that bears my signature, a law that the Supreme Court upheld as constitutional, a law that voters chose not to repeal last November,” he said, referring to his 2012 re-election against a Republican candidate, Mitt Romney, who vowed to repeal it.
With markets sliding around the world, Obama warned that bringing the government to the brink of a shutdown and threatening to force the U.S. into a default is putting a still fragile economic recovery at risk.
Parts of the economy that depend on the government “would be hamstrung,” Obama said. A shutdown would have “a very real impact on real people, right away.”
Global stocks fell the most in a month, trimming the biggest quarterly gain since the start of 2012. The Standard & Poor’s 500 Index slipped 0.6 percent to 1,681.55 at 4 p.m. in New York and the MSCI All Country World Index (SPX) lost 0.8 percent.
The U.S. is still almost 2 million jobs shy of regaining all of the 8.7 million lost since December 2007, which marks the beginning of the worst downturn since the Great Depression. Federal Reserve officials earlier this month reduced their growth estimates for this year, saying gross domestic product will probably rise 2 percent to 2.3 percent, down from a June projection of 2.3 percent to 2.6 percent.
Private economists have estimated that a government shutdown would reduce fourth-quarter economic growth by as much as 1.4 percentage points, depending on its length.
The fight is taking a toll on voters’ views of Obama and Republicans in Congress. Obama’s 47 percent favorability rating and the 34 percent positive reading for Republicans in a Bloomberg National Poll are the worst ever for both in the survey since it began in 2009. The 44 percent approval rating of the Democratic Party is at a two-year low.
Obama said Republicans were insisting on repealing or delaying the health law “all to save face after making some impossible promises to the extreme right wing of their party.”
The fiscal negotiations are occurring against a backdrop of shrinking U.S. deficits. The budget shortfall narrowed from more than 10 percent of gross domestic product at the end of 2009 to 5.7 percent of GDP for the 12 months ended March 31, the smallest gap in four years, according to data compiled by Bloomberg.
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