Obama warns of economic disaster as shutdown continues

Washington : As the US government shutdown entered third day Thursday, President Barack Obama called on Republican House Speaker John Boehner to allow a reopening of the government with a quick vote on a clean budget bill.

With no end to the stalemate in sight, Obama suggested the Republican leader is preventing a vote on a funding bill because he doesn’t want to anger “extremists” in his party, who want to derail his signature healthcare law.

Boehner is the only thing standing in the way of reopening the federal government, he said speaking at a small business just outside of Washington, and asked him to quickly hold a vote on a spending bill without making extra demands.

The longer the shutdown goes on, the worse the impact on the US economy will be, Obama said as the Treasury Department warned amid another impasse over raising the country’s debt-limit that mere prospect of default endangers the economy.

“Political brinksmanship that engenders even the prospect of a default can be disruptive to financial markets and American businesses and families,” the Treasury said in a report released Thursday.

Treasury Secretary Jack Lew has told lawmakers that the need to raise the ceiling is becoming urgent. The US reached its debt limit in May. Since then, the Treasury has been using special accounting measures to keep borrowing just under the limit. Lew has said those will run out no later than Oct 17.

Obama held an hour-long meeting Wednesday with Boehner and three other top Congressional leaders seeking passage of a stopgap spending measure and a debt-ceiling increase, but failed to get a deal.

Wednesday’s meeting, also attended by Republican House majority leader Eric Cantor, Democrat Senate majority leader Harry Reid and House minority leader Nancy Pelosi yielded no breakthrough on the budget crisis.

Obama and his Democrats stuck to their guns seeking a clean continuing resolution and a debt ceiling increase with no conditions attached, while Republicans continued to insist on either scrapping or delaying Obama’s signature health care law.

Earlier in the day, Obama said he was “prepared to negotiate on anything” regarding the federal budget — but only after Congress passes “a clean piece of legislation that reopens the government” and allows the US “Treasury to pay for things that Congress itself already authorised”.

“Absolutely, I’m exasperated, because this is entirely unnecessary,” Obama told CNBC in an interview.