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Obama: shutdown will have 'real economic impact'

US President Barack Obama warned Monday that the imminent shutdown of large parts of the federal government would have real and dramatic economic consequences for thousands of Americans.

world Updated: Oct 01, 2013 11:38 IST
US government,US Senate,Barack Obama

US President Barack Obama warned Monday that the imminent shutdown of large parts of the federal government would have real and dramatic economic consequences for thousands of Americans.

Just hours before funding was due to expire, Obama blamed the "extreme right wing" of the Republican Party for holding the budget hostage in a bid to defund his trademark health reform.

The US government was on the brink of a partial shutdown on Monday after the Democratic-led Senate refused to back down in a clash with the Republican-led House over President Barack Obama's landmark health law.

Less than 10 hours before a midnight deadline, the Senate voted 54-46 to reject a proposal by House Republicans work a delay of health care plan into a temporary funding bill. It is now up to the House of Representatives to accept a bill that doesn't delay the health initiative – which it has refused to do – or find an alternative acceptable to the Senate.

If it fails to do either of those options, the government faces its first partial shutdown in 17 years. It would force 800,000 federal workers off the job without pay and rattle the shaky US economic recovery.

"We're at the brink," said Sen. Barbara Mikulski, a Democrat, as House Republican leaders calculated their next move.

Some critical services would continue during a shutdown, such as patrolling the borders and controlling air traffic. The State Department would continue processing foreign applications for visas, and embassies and consulates overseas would continue to provide services to American citizens.

Despite no signs of a compromise, Obama insisted he is "not at all resigned to a shutdown" and he expected to speak to congressional leaders throughout the day to address the impasse.

The president has vowed not to allow Republicans to use the spending bill to derail his most important domestic policy achievement.

"There's a pretty straightforward solution to this," Obama said at the White House. That's for "everybody to act responsibly and do what's right for the American people."

The prospect of a shutdown contributed to a decline in stock markets around the world. US stocks sank as Wall Street worried the budget fight could lead to something much worse for the economy - a failure to raise the nation's borrowing limit.

Whether or not Congress averts a shutdown, Republicans are sure to move the health care fight to a must-do measure looming in mid-October to increase the borrowing cap. The US risks a market-rattling, first-ever default on its obligations if Congress fails to raise that limit.

Both a shutdown and a default would be politically risky ahead of next year's congressional elections.

Some Republican leaders fear the public will blame their party for a shutdown if they insist on crippling health care reform. But individual House members may face a greater risk by embracing a compromise. Many represent heavily partisan congressional districts, and voters in primaries have ousted lawmakers, particularly Republicans, they see as too moderate.

Since the last government shutdown in 1995-1996, temporary funding bills have been noncontroversial, with neither party willing to chance a shutdown to achieve legislative goals it couldn't otherwise win.

But with the 3-year-old health care law nearing implementation, hardcore tea party conservatives are determined to block it.

There are few issues Republicans feel as passionately about as the health care reform, which they have dubbed "Obamacare." They see the plan, intended to provide coverage for the millions of Americans now uninsured, as wasteful and restricting freedom by requiring most Americans to have insurance.

A crucial part of the plan will begin Tuesday, whether or not the government partially closes: enrollment in new health care exchanges for millions of Americans. That's because most of the program is paid from monies not subject to congressional appropriations.

House Republican leaders met in Speaker John Boehner's office to plan their next move. Officials said that even though time was running short, they expected at least one more attempt to squeeze a concession from the White House, likely a demand to force a one-year delay in the requirement for individuals to purchase health coverage or face financial penalties.

Republican unity over their strategy showed unmistakable signs of fraying as the deadline neared. Several Republican senators and House members said they would be willing to vote for straightforward legislation that would keep the government functioning, with no health care-related provisions.

"We haven't given up on Obamacare ... but for this week we may have to give up," said Republican Rep. Doug Lamborn.

First Published: Oct 01, 2013 03:04 IST