Politics

October 9, 2013

Democrats try using debt bill to avoid default

Meanwhile, the stock markets start to lose confidence as the budget stalemate shows no signs of a solution

By Zachary A. Goldfarb
The Washington Post

WASHINGTON — President Obama and Senate Democrats tried Monday to break a political logjam that could threaten the U.S. economy, advancing legislation that would raise the federal debt ceiling as soon as possible.

Democrats said they will attempt to force Republicans to agree to a long-term, $1 trillion debt-limit increase to ensure that the government does not reach a point this month where it may be unable to pay its bills, risking its first default. They said that if necessary they also may accept a short-term bill, perhaps lasting only weeks, to avoid going over the brink.

The Democratic push on the debt limit came as a partial government shutdown entered its second week with no solution in sight. New polling showed that the fiscal standoff is hurting Republicans far more than it is Obama, although no party is faring particularly well.

A Washington Post-ABC News survey found that 70 percent of Americans disapprove of the way Republicans are handling budget negotiations, up from 63 percent last week, with 24 percent approving.

Obama’s approval rating on budget matters ticked up slightly over the same time period – from 41 percent to 45 percent – but 51 percent disapprove. Obama’s Democratic colleagues in Congress are faring worse, with 61 percent of Americans disapproving, up from 56 percent before the shutdown.

In a hastily arranged visit Monday to the headquarters of the Federal Emergency Management Agency, Obama said he will not bow to Republicans’ demands that he enter negotiations with them or risk a continued shutdown or a default.

“I cannot do that under the threat that if Republicans don’t get 100 percent of their way, they’re going to either shut down the government or they are going to default on America’s debt,” he said.

Republicans remained undeterred, saying they would neither raise the $16.7 trillion debt ceiling nor reopen the government without first winning concessions.

Lawmakers have little time to resolve the impasse. After Oct. 17, the Treasury Department says it cannot guarantee that it can pay all of the government’s bills, and independent analysts say the government would have less than two weeks before a default.

Financial markets on Monday sounded alarms about the brinkmanship. The stock market fell, with the Standard & Poor’s 500 index down 14.38 points, to 1676.12. Volatility spiked. Short-term borrowing costs for U.S. taxpayers reached their highest point in nearly a year.

Later this week, Senate Majority Leader Harry Reid, D-Nev., hopes to open debate on a bill that would raise the debt, aides said. To do so, he would need the support of all 54 Senate Democrats and six Republicans – a goal that seemed possible Monday, but is far from assured.

Meanwhile, if any senator objects to the proposal, procedural hurdles would prevent the measure from clearing the Senate and reaching the House until Oct. 15 – two days before the Treasury Department’s deadline.

Several Republican senators left the door open to supporting a “clean” debt-limit bill, but said it would depend on whether Democrats were willing to enter talks on broader budget reforms.

“I don’t know what the dynamics are here. I don’t know what’s being offered. It’s too early,” said Sen. John McCain, Ariz., who nonetheless held out hope. “I’m going to have to wait and see.”

But senior Republican aides said any debt-limit proposal in the House is likely to need significant conservative sweeteners to be considered.

House Speaker John Boehner, R-Ohio, sharply criticized Democrats for not coming to the negotiating table.

“Now, the American people expect when their leaders have differences, and we’re in a time of crisis, we’ll sit down and at least have a conversation,” Boehner said on the House floor. “Really, Mr. President, it’s time to have that conversation before our economy is put further at risk.”

(Continued on page 2)

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