Government shutdown: White House meeting with lawmakers goes nowhere

Both sides appeared unmoved after the White House attempt to end the government shutdown. Republicans insist federal funding be tied to changes in Obamacare. Democrats say they won’t budge.

For 90 minutes late Wednesday afternoon, the leaders of the House and Senate met with President Obama at the White House, looking to resolve a government shutdown headed into its third day while also averting what would be an even costlier default on US debt.

The meeting failed to do that, and both sides appear as intransigent as ever.

Obama "refuses to negotiate," House Speaker John Boehner (R) of Ohio told reporters as he left the White House. "All we're asking for here is a discussion and fairness for the American people under Obamacare.”

But Senate Majority Leader Harry Reid (D) of Nevada said, "We're locked in tight on Obamacare" and neither the president nor Democrats in Congress will accept changes in that health-care law as the price for spending legislation needed to reopen the government.

In an interview with CNBC before meeting with lawmakers, Obama said he would not negotiate with Republicans until the government is reopened and Congress votes to raise the debt limit.

"If we get in the habit where a few folks, an extremist wing of one party, whether it's Democrat or Republican, are allowed to extort concessions based on a threat to undermine the full faith and credit of the United States, then any president who comes after me, not just me, will find themselves unable to govern effectively," he said.

Warnings about the impact of the government shutdown and – less than two weeks from now (Oct. 17) – the potential failure to raise the US debt limit mounted up Wednesday.

Director of National Intelligence James Clapper told a Senate Judiciary Committee hearing that the shutdown, together with the recent sequestration, “seriously damages our ability to protect the security and safety of this nation and its citizens.”

“This is not just a Beltway issue,” he said. “This affects our global capability."

Mr. Clapper also warned that the shutdown (which has furloughed about 70 percent of intelligence agency civilians, including thousands at the Central Intelligence Agency and National Security Agency) “is a dreamland for foreign intelligence services to recruit.”

US Army Chief of Staff Gen. Ray Odierno said the shutdown “impacts significantly day-to-day operations," forcing the military to cut training and other important programs.
 
"The longer it goes on, the worse it gets,” he told Reuters in a telephone interview from Germany, where he was attending a conference. “Every day that goes by, we are losing manpower, we are losing capability, so in my mind it is important we get this resolved.”

Meanwhile, Wall Street jitters continued the second day of the shutdown. The Dow Jones industrial average fell 58.56 points, the Standard & Poor's 500 index dropped 1.13, and the NASDAQ composite index fell 2.96 points.

"Everyone is very cautious about how to react to the US shutdown," Andrew Sullivan at Kim Eng Securities in Hong Kong told USA Today. "There's a lot for people to worry about."

In Washington, where they had just met with the president and Vice President Joe Biden, Goldman Sachs CEO Lloyd Blankfein, Bank of America CEO Brian Moynihan, and JPMorgan Chase CEO Jamie Dimon warned of the adverse consequences of default.

“You can re-litigate these policy issues [such as Obamacare] in the political forum, but they shouldn’t use the threat of causing the US to fail on its obligations to repay its debt as a cudgel,” Mr. Blankfein told reporters.

“There’s precedent for a government shutdown. There’s no precedent for a default,” he said. “We’re the most important economy in the world. We’re the reserve currency of the world. Payments have to go out to people. If money doesn’t flow in, then money doesn’t flow out. We really haven’t seen this before and I’m not anxious to be a part of the process that witnesses it.”

Polls continue to show that while Americans consider this to be a “plague on both your houses” situation, they are more inclined to blame Republicans than Democrats for the current impasse.

A CNN/ORC International poll regarding the debt ceiling impasse released Wednesday finds that Republicans are seen as “more responsible” than Obama 53 to 31 percent. Most of those surveyed (56 to 38 percent) also believe that failure to raise the debt ceiling by the Oct. 17 deadline would be a “bad thing.”

Regarding the Affordable Care Act, a majority (51 to 43 percent) also thinks that “raising the debt ceiling to make sure the government has enough money to pay its debts” is more important than “delaying the date on which major provisions in the new health care law will take effect.”