Washington - Talks between an exasperated US President Barack
Obama and top Republicans on Wednesday failed to end a government shutdown,
with both sides accusing the other of refusing to negotiate.
The breakdown ensured that the United States heads into a
third day of a dramatic government spending freeze on Thursday, with no end in
sight and the economy in peril.
Ramping up tensions, Obama had sent Wall Street a blunt
warning that the political crisis that has paralysed the federal government
could yet trigger a US catastrophic debt default.
But when he met for more than an hour with Republican House
Speaker John Boehner and Senate minority leader Mitch McConnell, there was no
sign of a breakthrough.
Hundreds of thousands of federal workers home, museums and
national parks are shut, much scientific research is on hold and the shutdown
is now threatening already sluggish economic growth.
"The president reiterated one more time that he will
not negotiate," Boehner said, emerging empty-handed into a warm Washington
night to address reporters after the West Wing talks.
On that point at least, the two sides agreed.
Obama said in an interview with CNBC that he would not
negotiate on budget matters until Republicans had passed a bill to reopen the
government and raise the $16.7 trillion US debt ceiling.
The cap must be raised within two weeks or Washington could
default on its government debt and payments for the first time, result that
could hurt the credit rating of the world's largest economy.
After the talks, Obama's spokesperson Jay Carney issued a
statement saying that his boss still hoped "common sense" will
Senate Democrats have repeatedly blocked Republican House
funding bills that seek to dismantle or delay Obama's signature healthcare
reform bill, widely known as "Obamacare."
The impasse left the government without a budget for the new
fiscal year, and the shutdown with go into a third day on Thursday.
Reid emerged from the talks complaining at Boehner's
attitude, and vowed never to allow Republicans to overturn the healthcare law.
"We are locked in tight on Obamacare," Reid said.
Investors 'should be concerned'
In his CNBC interview, Obama reached his opponents to
directly address the already nervous financial community.
In unusually frank comments on issues that could sway
markets, Obama warned that investors should be worried.
"This time's different. I think they should be
concerned," he said.
"When you have a situation in which a faction is
willing potentially to default on US government obligations, then we are in
Obama said he would not negotiate until lawmakers pass a
temporary financing bill and raise the debt ceiling, but that after that he
would be "prepared to have a reasonable, civil negotiation around a whole
slew of issues."
The president warned it would set a terrible precedent to
allow lawmakers of any party to hold a White House to ransom over the
government's borrowing limit.
"Absolutely I am exasperated, because this is entirely
unnecessary," Obama said.
Hopes of an early exit to the shutdown are fading.
"Most of the time you can see an end game,"
Republican Senator Johnny Isakson told MSNBC. "Right now, there's no end
game in sight."
Some signs of incremental movement did emerge, however.
Democrats pledged to appoint negotiators to thrash out a long-term
budget -- provided Republicans agree to an immediate six-week federal spending
measure with no anti-Obamacare provisions.
Earlier, Obama had gathered a group of high flying CEOs,
apparently hoping they would pressure Boehner to pass a temporary funding bill.
Goldman Sachs boss Lloyd Blankfein warned that America was
on dangerous ground by flirting with not raising the debt ceiling.
A previous period of brinkmanship on the issue badly hit the
US credit rating.
"There's a precedent for a government shutdown, there's
no precedent for a default," he said after meeting Obama.
The fallout has already caused Obama to shorten his
long-planned Asia trip, scrapping stops in Malaysia and the Philippines that
were due to begin this weekend, so he could attend to the crisis at home.