* Fears grow shutdown will last until mid-October
* Budget row gets closer to merging with debt limit date
* Republican-led House prepares more mini funding bills
* Treasury warns of potential "catastrophic" downturn
By Mark Felsenthal and Richard Cowan
Oct 3 The shutdown of the U.S. government
appeared likely to drag on for another week and possibly longer
as lawmakers consumed day three of the shutdown with a stalling
game and there was no end in sight until the next crisis hits
Washington around Oct. 17.
Bowing to the reality that the impasse requires him to
remain in Washington, President Barack Obama canceled plans to
attend summits in Indonesia and Brunei next week. Earlier this
week, he canceled visits to Malaysia and the Philippines because
of the shutdown.
Oct. 17 is the date Congress must raise the nation's
borrowing authority or risk default, and members of Congress now
expect it to be the flashpoint for a larger clash over the U.S.
budget as well as President Barack Obama's healthcare law.
The situation gives "every appearance of getting dangerously
close to the conversation on the debt ceiling," said Nancy
Pelosi, the Democratic minority leader of the House of
In fact, she said, "We're in the conversation on the debt
At the same time, hopes that the debt ceiling fight could be
resolved without a catastrophe were raised by reports in The New
York Times and Washington Post that House Speaker John Boehner
told other lawmakers he would work to avoid default, even if it
meant relying on the votes of Democrats, as he did in August
A spokesman for Boehner would neither confirm nor deny the
reports, restating previous public statements by the speaker
that "the United States will not default on its debt."
Senator Charles Schumer, the second-ranking Senate Democrat,
reacting to the reports, said, "This could be the beginnings of
a significant breakthrough."
The New York senator added, "Even coming close to the edge
of default is very dangerous," as he urged quick passage of
legislation to raise the $16.7 trillion cap on borrowing.
There was little action along with the talk on Thursday. The
Republican-controlled House continued what has become a long
process of voting to fund publicly popular federal agencies -
like the Veterans Administration, the National Park Service and
the National Institutes of Health - that are now partially
Republicans know that neither the Democratic-controlled
Senate nor Obama will go along with such an approach, but it
allows them to accuse Democrats of working against the interests
of veterans, national parks and cancer patients.
House Republicans on Thursday began lining up 11 more bills
to fund targeted programs. They are to fund nutrition programs
for low-income women and their children, a program to secure
nuclear weapons and non-proliferation, food and drug safety,
intelligence-gathering, border patrols, American Indian and
Alaska Native health and education programs, weather monitoring,
Head Start school programs for the poor and other aid for
schools that rely heavily on federal assistance.
Disaster assistance also is slated for temporary renewal
under the House measures, as well as a bill to provide
retroactive pay to federal workers during the government
"We're trying to see if we can get the Senate and the
president to start talking to us, on anything. They're just not
talking to us," said Republican Representative Mario Diaz-Balart
of Florida, explaining the tactic.
The bills are likely to be debated on the House floor over
coming days, not all at once. Democrats have rejected the
piecemeal approach and Obama has said he will veto the measures.
'STOP THIS FARCE'
In a speech at a Maryland construction company on Thursday,
Obama challenged Republicans to "stop this farce" by allowing a
straight vote on a spending bill. He reiterated he will not
negotiate on the spending bill or the debt ceiling.
Obama said there were enough Republicans willing to pass a
spending bill immediately if House Speaker John Boehner would
allow a vote on a bill without partisan conditions attached, a
so-called clean vote. But Obama said the speaker was refusing to
do so because "he doesn't want to anger the extremists in his
"My simple message today is 'Call a vote,'" Obama said.
"Take a vote. Stop this farce, and end this shutdown right now."
Work in Congress was interrupted on Thursday afternoon when
the U.S. Capitol was locked down briefly due to gunshots fired
outside the building. One female suspect was shot dead after a
brief car chase across downtown Washington. Police said it
appeared to be an isolated incident.
The security alert halted work in both the House and the
Senate and briefly diverted attention from the shutdown that
took effect at midnight on Monday (0400 GMT on Tuesday), leaving
nearly a million federal workers sidelined without pay and many
others in the private sector suffering from the knock-on effect.
The Capitol Police who responded to the incident are working
without pay due to the shutdown - they are deemed essential and
so remain on the job, but their pay is frozen.
In his speech earlier, Obama warned that as painful as the
government shutdown was, a default caused by a failure to raise
the debt limit would be dramatically worse for the economy.
Alhough some moderate Republicans have begun to question
their party's strategy, Boehner so far has kept them largely
united with the small bills to reopen national parks, restore
health research and other parts of the government most visibly
affected by the shutdown.
The Tea Party Express, one of the anti-tax groups in the
conservative Tea Party that has led the fight against Obamacare,
sent an email to supporters on Wednesday evening saying that as
many as 12 Republicans had indicated they were willing to "give
up on the fight" and join Democrats in voting for a funding bill
"We need your immediate support to put pressure on the weak
Republicans to pass a sensible solution that allows America to
avoid the Obamacare train-wreck, while fully funding the federal
government," the group said in its email.
The U.S. Treasury warned on Thursday about the
"catastrophic" impact of a debt default, saying a failure to pay
the nation's bills could punish American families and businesses
with a worse recession than the 2007-2009 downturn.
Major stock markets fell on Thursday, while the dollar
dropped to an eight-month low over concern the budget standoff
would merge with the coming fight over raising the U.S.
The U.S. Labor Department on Thursday said the government's
September employment report, the most widely watched economic
data both on Wall Street and Main Street, would not be released
as scheduled on Friday due to the shutdown.
Despite the shutdown, Republicans have failed to derail
Obama's controversial healthcare law, which passed a milestone
on Tuesday when it began signing up uninsured Americans for
subsidized health coverage.
Obama blamed the shutdown on Republicans' "obsession" with
reversing healthcare reforms passed in the Affordable Care Act,
but noted they had been passed by the House of Representatives
and the Senate and been deemed constitutional by the Supreme
"Last November, the voters rejected the presidential
candidate that ran on a platform to repeal it," he said on
Thursday. "So the Affordable Care Act has gone through every
single democratic process, all three branches of government.
It's the law of the land. It's here to stay."