Can lawmakers avoid U.S. default as time runs short?

 

Capitol, debt, government shutdown
The markets are getting nervous because of inaction in Washington.
Credit: Reuters

U.S. lawmakers in the Senate said on Monday they hoped to reach a deal soon to reopen the government and avert a looming default as investors worried that Republicans and Democrats might not be able to resolve their differences by a Thursday deadline.

After weekend negotiations proved fruitless, senators from both parties said they still thought they could reach agreement in the coming hours. With the most unrealistic demands off the table, the two sides were trying to craft a temporary measure that would allow Washington to step back from the ledge.

“I’m hopeful we can have something meaningful by the end of the day,” Republican Sen. Roger Wicker of Mississippi said on MSNBC.

The Treasury Department says it cannot guarantee that the U.S. government will be able to pay its bills past Oct. 17 if Congress does not raise the $16.7 trillion debt ceiling by then.

It’s not clear whether Congress can meet that deadline. Even if Republicans and Democrats in the Senate reach agreement on Monday, hardliners such as Texas Republican Sen. Ted Cruz might be able to delay a vote for several days.

The House of Representatives also would need to sign off on the plan. Republican leaders there face strong pressure from a vocal conservative flank that is deeply reluctant to make concessions to President Barack Obama and his Democrats.

Many say they won’t back any deal that doesn’t undercut Obama’s 2010 healthcare reform law, the Affordable Care Act — a nonstarter for Democrats.

“We’ve got to draw some lines in the sand now. This, to me, is an epic battle over Washington versus America, and I hope America wins,” Republican Rep. Matt Salmon of Arizona said on CNN.

Analysts expect that any deal is likely to come down to the wire.

Though the Treasury likely will have enough cash on hand to meet its obligations for a week or so, it might be forced to pay a higher interest rate on the bonds it is due to issue on Thursday.

Banks and money market funds are already shunning some government bonds that are normally used for short-term loans. In China, the largest foreign holder of U.S. debt, the state news agency Xinhua said it was time for a “de-Americanized world.”

U.S. stocks fell at the open on Monday. The S&P 500 Index was down 0.53 percent and the Dow Jones Industrial Average was down 0.48 percent by mid-morning.

The ongoing government shutdown is beginning to weigh on the economy as well. The hundreds of thousands of federal employees who have been temporarily thrown out of work are likely to get back-pay when the standoff is resolved. But they aren’t getting paid now, forcing many to dial back on personal spending and cancel holiday travel plans.

Any agreement that would come in the following days would not resolve disagreements over long-term spending and the Affordable Care Act that led to the standoff in the first place. Despite the objections of rank-and-file conservatives like Salmon, many Republicans are eager to move the discussion away from Obamacare and toward possible spending cuts.

“All of us now are talking about spending, which is where we should have been in the first place,” Republican Sen. Bob Corker of Tennessee said on MSNBC.

Republicans have floated plans that would push back any possible default for several weeks and keep the government open for several months, but Democrats say that would simply set up another market-rattling confrontation which could spook consumers and further weigh on the economic recovery.

“If we just extend this to January, we’ll be right back in the middle of this,” Democratic Sen. Mark Begich of Alaska said on MSNBC.



News
Entertainment
Sports
Lifestyle
National

California passes 'yes-means-yes' campus sexual assault bill

Californian lawmakers passed a law on Thursday requiring universities to adopt "affirmative consent" language in their definitions of consensual sex, part of a nationwide drive to curb sexual assault on…

National

Syrian refugees top 3 million, half of all…

By Stephanie NebehayGENEVA (Reuters) - Three million Syrian refugees will have registered in neighboring countries as of Friday, but many remain trapped by the advance…

International

North Korean leader's money manager defects in Russia:…

A senior North Korean banking official who managed money for leader Kim Jong Un has defected in Russia and was seeking asylum in a third country, a South Korean newspaper…

Local

MAP: New York City Street Closures August 29,…

The Department of Transportation and NYPD said there may be residual delays near all of the street closures on August 29, 31 and 31. Several streets and avenues will be…

Going Out

'Friends' coffeehouse Central Perk coming to NYC —…

"Friends" is coming back for a one-off special: "The One with the Free Coffee." Warner Bros. is bringing a pop-up replica of Central Perk, the…

Movies

Interview: 'As Above, So Below' directors: 5 ways…

The fraternal directors of the found footage horror "As Above, So Below" dish on the best ways to frighten the bejesus out of audiences.

Movies

Criterion's new Jacques Demy box mixes the light…

Jacques Demy, the most effervescent of French New Wave filmmakers, gets a Criterion box all to himself, with classics like "The Umbrellas of Cherbourg."

Entertainment

Comedian Joan Rivers, 81, rushed to New York…

NEW YORK (Reuters) - Acerbic comedian and fashion critic Joan Rivers was rushed to Mount Sinai Hospital in New York on Thursday after she reportedly…

NFL

3 things we learned in the Giants preseason…

The final score didn’t matter — a 16-13 win by the Giants — but it would’ve been nice to finally see Big Blue’s new-look offense get on track.

NFL

NFL Power Rankings: Seahawks, Broncos, Patriots, 49ers start…

NFL Power Rankings: Seahawks, Broncos, Patriots start at top

U.S. Soccer

5 facts about new England captain Wayne Rooney

Manchester United striker Wayne Rooney was named as the new England captain by coach Roy Hodgson on Thursday.

NFL

Jets vs. Eagles: 3 things to watch

A win on Thursday night at the Eagles would give the Jets a 3-1 record and just their second winning preseason under head coach Rex Ryan.

Style

Trend: White hot on the 2014 Emmy's red…

White was one of the big trends on the Emmy's red carpet.

Food

Recipe: Samuel Adams beer-marinated grilled shrimp

Summer calls for two things: a cold beer and light food. Sam Adams' Latitude 48 IPA fairly bursts with citrus notes, making it an ideal marinade…

Wellbeing

4 healthy ingredient swaps to make your meals…

When it comes to eating well, everyone knows they could be doing better. But cooking in an apartment on a busy schedule is a recipe…

Wellbeing

Heart trumps brain when it comes to movies…

When you need a good cry, do you reach for the movie that’s “based on a true story”? Science says you’re giving your brain far…