White House open to short-term hike in debt limit

WASHINGTON (AP) — A market-rattling federal

default loomed and the partial government shutdown lingered on Monday,

but a gridlocked

Congress betrayed little or no urgency toward resolving either of

the nation's most challenging short-term economic disputes.

Stocks got a case of the jitters on Wall Street, and halfway around the world China stressed the importance for the global

economy of raising the U.S. debt limit.

"Safeguarding the debt is of vital

importance to the economy of the U.S. and the world," Vice Finance

Minister Zhu Guangyao

said, according to the official Xinhua News Agency. China holds

$1.277 trillion in U.S. Treasury bonds, second only to Japan.

At home, the political rhetoric was unchanged — and generally uncompromising — while a new poll suggested Republicans are

paying a heavier price than Democrats for the deadlock.

President Barack Obama said the House should

vote immediately on ending the partial closure of the federal


He accused House Speaker John Boehner of refusing to permit the

necessary legislation to come to the floor because he "doesn't

apparently want to see the ... shutdown end at the moment, unless

he's able to extract concessions that don't have anything

to do with the budget."

Boehner, in rebuttal, called on Obama to agree to negotiations on changes in the nation's health care overhaul and steps to

curb deficits, the principal GOP demands for ending the shutdown and eliminating the threat of default.

"Really, Mr. President. It's time to have that conversation before our economy is put further at risk," the Ohio Republican

said in remarks on the House floor.

Obama said he would talk with the

Republicans on those topics or virtually any others. But the White House

has said repeatedly

the president will not negotiate until the government is fully

re-opened and the debt limit has been raised to stave off the

nation's first-ever default.

White House aide Jason Furman told reporters

that if Boehner "needs to have some talking point for his caucus that's


with us not negotiating ... that's not adding a bunch of

extraneous conditions, of course he's welcome to figure out whatever

talking point he wants that helps him sell something."

The current standoff is the latest in a

string of clashes over the past three years between Obama and a House

Republican majority

that has steered to the right with the rise of the tea party.

Most Democrats and many Republicans have assumed the GOP will pay a heavier price for a shutdown than the Democrats, since

that was the case in 1996.

And a survey released by the Washington Post-ABC said disapproval of Republicans was measured at 70 percent, up from 63 percent

a week earlier. Disapproval of Obama's role was statistically unchanged at 51 percent.

In the Senate, where majority Democrats

forced approval of legislation before the shutdown aimed at preventing

it, officials

said Majority Leader Harry Reid was drafting a bill to raise the

current $16.7 trillion debt ceiling before the Oct. 17 deadline

when Treasury Secretary Jacob Lew has said the government will

reach its borrowing limit.

The measure would allow the government to meet its borrowing needs through the 2014 elections, officials said, although few

details were immediately available.

Assuming Democratic support, the bill could pass the Senate quickly if Republicans merely vote against it as they press for

concessions from the White House. But passage could be delayed until Oct. 17 if the GOP decides to mount a filibuster.

Separately, a White House aide said Obama would be receptive to an interim, short-term measure to prevent default.

In the House, Republicans declined to say when they would put debt limit legislation on the floor for a vote.

Instead, the public agenda for the day consisted of legislation to reopen the Food and Drug Administration, the latest in

a string of measures to soften the impact of the partial shutdown.

Earlier House-passed bills would end the shutdown at national parks, the National Guard and Reserves and the Women, Infants

and Children nutrition program, and ease effects for the Washington, D.C., government, among other locations. Each of the

measures cleared the House with some Democratic support.

Yet each is under a veto threat by the White House, and Reid opposes them in the Senate as far less than the full restoration

of government services that most Democrats favor.

Still, the shutdown eased over the weekend,

when about 350,000 civilian defense workers were recalled as the result

of legislation

Congress passed and Obama signed after the shutdown began.

That left an estimated 450,000 federal

employees idle at agencies responsible for domestic programs, ranging

from the Departments

of Education to Energy, and including Labor, Health and Human

Services, Interior, Transportation and more.

The shutdown was felt unevenly, however, because of bewilderingly complex rules and the ability of senior officials to declare

some projects essential and therefore allowed to remain open.

Some routine food checks by the FDA were

suspended, but the Department of Agriculture's meat inspections

continued uninterrupted.

Much of the nation's space agency was shuttered, although work

continued on plans to launch a robotic probe to Mars, which

has a once-every-two-years launch window.

Despite the order returning civilian Pentagon workers to their government jobs, defense contractor Lockheed Martin announced

it would furlough about 2,400.

The Federal Emergency Management Agency, where Obama visited, served as a demonstration for the variable impact of the partial


Officials said the agency had furloughed about 86 percent of its workers, then had recalled about 200 of them last week to

prepare for the threat posed by Tropical Storm Karen in the Gulf Coast region.

With the threat passed, Obama said at least 100 of them have been re-furloughed.

"That's no way of doing business," he said.

Whatever the shutdown's inconveniences, it was easily rivaled by the warnings over a default, in which the United States would

not be able to pay all its bills.

"A default would be unprecedented and has

the potential to be catastrophic," a Treasury report said. "Credit

markets could

freeze, the value of the dollar could plummet, U.S. interest rates

could skyrocket, the negative spillovers could reverberate

around the world."

Private economists generally agree that a default on the U.S. debt would be extremely harmful, especially if the impasse was

not resolved quickly.

Lew has said that while Treasury expects to have $30 billion of cash on hand on Oct. 17, that money would be quickly exhausted

in paying incoming bills given that the government's payments can run up to $60 billion on a single day.