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Obama Worries Impasse Risks Default

Obama Worries Impasse Risks Default

By Alexis Simendinger - October 1, 2013

How long can this go on?

Days, weeks … perhaps into a debt-ceiling standoff just 16 days away … or even beyond All Hallows Eve?

No one seemed to know Tuesday, at least no one in the hollowed-out White House.

President Obama -- at work in a West Wing where phones rang at empty desks and where “essential” aides handled duties for furloughed colleagues -- said the shutdown was Speaker John Boehner’s creation, and thus its solution was up to House Republicans.

Adding remarks to his planned event to kick off the Affordable Care Act’s insurance marketplaces, Obama stood in a hot Rose Garden and urged Boehner and his GOP colleagues to come to their senses and end a political brinksmanship that he said had no real winners:

The shutdown is hurting the economy.

It punishes real people and private businesses.

It mars America’s reputation.

It won’t end Obamacare.

And it puts the government farther from a long-term budget agreement, Obama said.

The phrase “Republican shutdown” cropped up again and again, and variations on that idea -- that the predicament is Boehner’s fault -- punctuated Democrats’ complaints on the first day of the government’s first such funding crisis in 17 years.

Conservative lawmakers who pledged to shutter the government to object to Obamacare had delivered on their pledge, the president conceded.

“A lot of the Republicans in the House ran for office two years ago promising to shut down the government, and so apparently they've now gotten their wish,” he said.

He compared House Republicans to children (“that’s not how adults operate”), arguing that it “seems strange” that the GOP had made “keeping people uninsured” the rallying cry of their conservative agenda.

“The longer this shutdown continues, the worse the effects will be,” said the president, who was accompanied by Health and Human Services Secretary Kathleen Sebelius and 12 people whose personal stories were intended to showcase the benefits of the health reform law.

Obama and his spokesman focused more intensively Tuesday on the next hurdle: a mid-October default risk should Congress not vote to raise the nation’s borrowing authority. Because some GOP lawmakers are celebrating the shutdown as an achievement, the president and his team worry that the same group will fight Obamacare to the brink of default or beyond.

“Let me repeat: I will not negotiate over Congress' responsibility to pay bills it's already racked up,” Obama said again and again.

White House Press Secretary Jay Carney said the president takes the threat of default seriously because he considers House Republicans responsible for bringing the country to the brink in the summer of 2011. That’s when budget negotiations in the West Wing among Obama, Vice President Biden, the president’s economic team, Boehner and House Majority Leader Eric Cantor collapsed in a storm of finger-pointing and accusations of bad faith.

At the time, ratings agency Standard & Poor’s downgraded America’s credit; independent economists, budget experts and Wall Street business leaders lectured Washington to work out a “grand bargain” to lower deficits. And the resulting distrust on both ends of Pennsylvania Avenue made fiscal incrementalism the new normal -- always dogged by heaping helpings of partisan head-knocking.

“I think we're all concerned … that this same faction of one party in one House ... will employ the same tactic when it comes to raising the debt ceiling that they have used so far,” Carney said. “The shutdown has its negative consequences, and they're real and they're concrete for a lot of people. And as the president said today, you know, as time passes those consequences will grow more severe. Default is exponentially worse.”

In the White House, the answer to “How long will this go on?” appeared to be “Until Congress agrees to let the Treasury Department borrow more money to pay bills that have stacked up.” That means the president views the drama as lasting perhaps another 16 days or more. That’s when Treasury anticipates exhausting its “extraordinary measures” to avert default.

By vowing not to negotiate over the debt ceiling, but offering to talk to Republicans separately about improving the Affordable Care Act, and reminding them he swallowed this year’s across-the-board spending cuts as part of short-term funding options, Obama is wheeling and dealing without being at a negotiating table, where he’s experienced little success with his opposition.

On Tuesday, the president placed responsibility for the shutdown on Boehner and said cooler Republican heads should prevail -- because he hopes the speaker will eventually be in a mood to put the government back to work.

On Wednesday, Obama is scheduled to meet with leading CEOs at the White House and seek their help in lobbying Congress to raise the debt ceiling without delay. The group is expected to include Goldman Sachs CEO Lloyd Blankfein and Jamie Dimon of JPMorgan Chase.

And on Thursday, the president will visit a Washington, D.C., small business, M. Luis Construction, to make the point that private employers -- often tethered by contract commitments to Uncle Sam -- are impacted when the government’s funding doesn’t flow. Another casualty of the shutdown may be Obama’s scheduled week-long itinerary through Southeast Asia, set to begin Saturday. In the pre-dawn hours Wednesday, the president called Prime Minister Najib of Malaysia and President Aquino of the Philippines to send his regrets that "due to the government shutdown" he would not be visiting those countries, as had been planned. The first stop is Bali, Indonesia, for the annual Asia-Pacific Economic Cooperation summit Oct. 5-7; however, the island backdrop may be deemed too distant, exotic and luxurious by the White House unless the president has finished wrestling with Congress over federal personnel sent home without pay and Americans in need of health coverage. If the impasse continues through Friday, that part of the trip may be off too. As of Wednesday, Bali and the ASEAN summit in Brunei Oct. 9-10 remained on the president's schedule.

Alexis Simendinger covers the White House for RealClearPolitics. She can be reached at asimendinger@realclearpolitics.com. Follow her on Twitter @ASimendinger.

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