Post-crisis, Obama tells Congress to get to work
President Barack Obama urged Congress to focus on matters like immigration reform on Thursday as Washington picked up the pieces from a destructive fiscal crisis that has slowed the U.S. economy and undermined the country’s international standing.
Less than 12 hours after he signed a bill that ended a 16-day partial government shutdown and averted a catastrophic default, Obama on Thursday said lawmakers must stop lurching from crisis to crisis and seek common ground on issues that also include farm policy and long-term budget issues.
“All my friends in Congress have to understand that how business is done in this town has got to change. Because we’ve all got a lot of work to do,” he said at the White House.
On Capitol Hill, Republican and Democratic negotiators held their first meeting to discuss the long-term budget fixes that have proven elusive over the past three years. The panel is supposed to reach agreement by December 13, but there are no guarantees it will succeed where similar efforts have failed.
Obama spoke one day after the Democratic-controlled Senate and the Republican-controlled House of Representatives passed a last-minute bill that will fund the government through January 15 and extend its borrowing authority through February 7, though the Treasury Department may be able to delay the day of reckoning for several weeks after that date.
The bill amounts to a clear defeat for Republicans, who had sought to tie government funding to measures that would undercut Obama’s signature Affordable Care Act.
That effort failed, and the standoff diverted public attention away from the administration’s sloppy rollout of the health law’s online insurance exchanges.
The fight split the Republican party into factions and left it on the wrong side of public opinion. Though Obama’s approval rating fell during the crisis, polls showed that most voters blamed Republicans for the standoff.
Republican Representative Tom Cole from Oklahoma, who will try to hammer out a budget deal with Democrats in the coming months, said it is time to move on. “We’ve had the fight,” he said on MSNBC. “Now it’s time to get down and identify the things we can agree on.”
U.S. stocks edged higher as investors returned to evaluating companies rather than Washington’s budget wrangling. The S&P 500 index fell as much as 4 percent during the standoff but is now nearly back to the record high it reached on September 18.
Hundreds of thousands of federal workers who had been idled by the standoff returned to work on Thursday. Vice President Joe Biden brought muffins to returning workers at the Environmental Protection Agency, while Agriculture Secretary Tom Vilsack greeted workers returning to the agency’s headquarters on the National Mall.
“I just hope we don’t have to go through this again in two months,” said Sandria Coombs, an EPA contractor.
What did she do during the shutdown? “Pray.”
Though federal workers will get back pay, the standoff is likely to slow economic growth in the fourth quarter from 2.5 percent to 2.3 percent with a high risk that it could slow even further, according a Reuters survey of 70 economists.
“The insanity in Washington is affecting consumer and business confidence. That’s the huge restraint to growth,” said Joel Naroff, chief economist at Naroff Economic Advisors in Holland, Pennsylvania.
The standoff has elevated borrowing costs, caused private-sector furloughs and delayed mortgage applications and construction permits. Mark Zandi, chief economist of Moody’s Analytics, estimates that it will cost the economy $20 billion.
The last debt-ceiling fight in 2011 depressed consumer confidence for months and raised the United States’ borrowing costs by $19 billion over 10 years.
One possible upside: the turbulence could prompt the Federal Reserve to keep its massive monetary stimulus in place through next year. One Fed official said the deadlock has undermined the central bank’s ability to fight high unemployment.
“Kicking the can down the road for a few months will not solve the pathology of fiscal misfeasance that undermines our economy and threatens our future,” Dallas Fed President Richard Fisher told the Economic Club of New York.
Economists say the spending cuts and tax hikes approved by Congress over the past several years have elevated the unemployment rate even as they have helped the country narrow budget deficits.
The deal approved Wednesday is likely to cause more short-term pain by keeping the across-the-board “sequester” cuts in place. Officials at the Pentagon and other federal agencies that have been able to minimize the impact of the cuts so far say they will slice deeper in the months to come.