Obama Says Boehner Must End Party Farce Causing Shutdown

President Barack Obama said there is only “one way out” of the partial government shutdown that entered its third day -- for House Speaker John Boehner to allow a vote on a stopgap spending bill without conditions.

Obama, speaking a day after meeting with Boehner and other congressional leaders at the White House, again criticized the Tea Party-backed faction of U.S. House Republicans who insist on linking government funding to delaying a major part of Obama’s 2010 Affordable Care Act health-care law.

“Take a vote, stop this farce and end this shutdown right now,” he said, referring to remarks from Representative Marlin Stutzman of Indiana about feeling disrespected. “If you’re being disrespected, it’s because of that attitude you’ve got, that you deserve to get something just for doing your job.”

Obama tonight called off a trip to Asia next week so that he can focus on getting congressional Republicans to vote on a spending measure to reopen the government, White House press secretary Jay Carney said in a statement.

“The cancellation of this trip is another consequence of the House Republicans forcing a shutdown of the government,” Carney said of the decision to drop plans to travel to Indonesia and Brunei for economic meetings.

Democrats, including Obama, say Republicans must end the shutdown and raise the debt ceiling as a precondition to talks on broader budgetary disputes. Republicans want to use the fiscal deadlines to extract changes to Obama’s health-care law and other policy concessions.

Debt Limit

An Oval Office meeting yesterday between Obama and congressional leaders failed to break the logjam as both sides reiterated the points they’ve been making for days, raising the prospect of a prolonged shutdown and merging the standoff over the government shutdown with raising the U.S. debt limit.

House Republicans, looking for a strategy, plan to advance a debt-limit bill while the government is shuttered, resurrecting an approach that includes a long list of party priorities, according to a Republican lawmaker and two leadership aides who asked for anonymity to discuss the strategy.

Party leaders plan a meeting for 10 a.m. tomorrow, and also will make an announcement tomorrow on the House’s schedule for possible weekend votes, said Majority Leader Eric Cantor.

Cantor of Virginia told reporters today he wants to negotiate the spending bill and debt limit together. He didn’t provide details on when Republicans will introduce a measure to raise the debt ceiling.

‘Wouldn’t Negotiate’

Boehner has been telling fellow Republicans that he won’t allow the U.S. to default on its debt, even if that requires Democratic votes, according to two Republican congressional aides who spoke on condition of anonymity.

“I find it unbelievable that the president would call Speaker Boehner and others to the White House just to let them know he wouldn’t negotiate,” Cantor said.

In a memo sent today to House Republicans, Cantor wrote that the Democratic position is “unsustainable” and that the Republican strategy of passing piecemeal legislation would eventually make Obama agree to negotiate.

Democrats said Boehner should allow a vote on funding the government and rely on promised support from Democrats and a group of House Republicans willing to accept a funding extension through Nov. 15 at the spending levels Republicans prefer.

Cantor questioned whether Democrats would actually vote for such a plan.

Stocks Fall

Senate Majority Leader Harry Reid said he had already made that concession to Boehner, on a funding level that Democrats oppose on principle.

“We have really compromised a lot,” Reid said today. “We agreed to what he wanted.”

U.S. stocks retreated for a second day. The Standard & Poor’s 500 Index declined 0.9 percent at 4 p.m. in New York for its steepest slide since Aug. 27. And 10-year Treasury yields fell one basis point to 2.61 percent at 4:14 p.m., according to Bloomberg Bond Trader prices, after touching the lowest level since Aug. 12.

Failure to raise the debt limit has “the potential to be catastrophic,” the Treasury Department warned in a report today that said credit markets could freeze and the value of the dollar could plummet. The government will exhaust its borrowing authority by Oct. 17 and have only cash after that.

Labor Report

Speaking at an event in Rockville, Maryland, Obama today reiterated his unwillingness to negotiate on a short-term spending bill or the debt ceiling.

The partial shutdown put about 800,000 federal employees out of work and shuttered many government functions.

The Labor Department said it wouldn’t release tomorrow’s unemployment report. A citizen’s privacy board investigating whether U.S. spy programs have infringed on the rights of Americans has postponed a public hearing scheduled for tomorrow because of the partial government shutdown.

U.S. efforts to enforce sanctions against Iran are being hurt because of furloughs at the Treasury Department, Under Secretary of State for Political Affairs Wendy Sherman said.

Other services, such as air-traffic control and Social Security benefits, were operating.

A one-week partial shutdown would probably shave 0.1 percentage point from economic growth, according to the median estimate of economists surveyed by Bloomberg, with the costs accelerating if the closing persists.

Political Leverage

As the stalemate wears on, both sides are grasping for political leverage.

House leaders passed five bills this week to reopen specific parts of the government. They picked politically popular agencies, forcing Democrats to choose between their party’s position against a piecemeal approach and specific programs they support.

The bills would reopen national parks, provide funding for the National Institutes of Health, let Washington’s city government spend its own money, fund the Department of Veterans Affairs and pay National Guard and Reserve forces.

“While we work out our differences here in Washington, children should not be denied the treatment,” said Cantor, who wrote in his memo that Republicans would propose more.

Senate Democrats said they wouldn’t pick and choose federal agencies to reopen, and the White House issued veto threats against all the bills.

‘Legislative Blackmail’

A bipartisan group of 20 House members offered to extend current funding levels until March 2014, repeal a tax on medical devices and extend a pension-funding provision in a way that would generate enough money in the next decade to cover the lost revenue from the device tax.

Senator Charles Schumer, a New York Democrat, said a specific proposal isn’t the issue. What matters, he said, is the precedent for the debt-ceiling debate and other fights.

“You can’t fall for that legislative blackmail or it will get worse and worse and worse,” said Schumer, whose party did negotiate on government funding and the debt ceiling in 2011.

Democrats, meanwhile, tried to take advantage of the split among House Republicans. Republicans are divided between hardliners aligned with Senator Ted Cruz of Texas who are seeking concessions on the health law and others who back a bill to reopen the government without conditions.

At least 20 Republicans have said they would support the Senate-passed plan. They haven’t aligned with Democrats on procedural votes to force Boehner’s hand.

Health Law

Unlike past fiscal feuds, this dispute is more about the health law than the 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 went into effect earlier this year and were part of the deal to avoid a 2011 default.

The U.S. budget deficit in June was 4.2 percent of gross domestic product, down from 10.1 percent 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.

(Corrects figure on budget deficit as a percentage of GDP in 37th paragraph. For more news on the shutdown, see EXT2.)
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