WASHINGTON – The United States moved closer to the possibility of the first-ever default on the government’s debt Sunday as Speaker John Boehner adamantly ruled out a House vote on a straightforward bill to boost the borrowing authority without concessions from President Barack Obama.
With no resolution in sight, Treasury Secretary Jacob J. Lew warned that Congress is “playing with fire” as he called on lawmakers to quickly pass legislation reopening the government and a measure increasing the nation’s $16.7 trillion debt limit.
The government shutdown precipitated by the budget brinkmanship entered its sixth day with hundreds of thousands of federal employees furloughed, national parks closed and an array of government services on hold.
Lew said Obama has not changed his opposition to coupling a bill to reopen the government and raise the borrowing authority with Republican demands for changes in the 3-year-old health care law and spending cuts.
Boehner insisted that Obama must negotiate if the president wants to end the shutdown and avert a default that could trigger a financial crisis and recession that would echo the events of 2008 or worse. The 2008 financial crisis pushed the country into the worst recession since the Great Depression.
“We’re not going to pass a clean debt limit increase,” the Ohio Republican said in a television interview. “I told the president, there’s no way we’re going to pass one. The votes are not in the House to pass a clean debt limit, and the president is risking default by not having a conversation with us.”
Boehner also said he lacks the votes “to pass a clean CR,” or continuing resolution, a reference to the temporary spending bill without conditions that would keep the government operating. Democrats argue that their 200 members in the House and close to two dozen pragmatic Republicans would back a so-called clean bill if Boehner just allowed a vote, but he remains hamstrung by his tea party-strong GOP caucus.
“Let me issue him a friendly challenge. Put it on the floor Monday or Tuesday. I would bet there are the votes to pass it,” said Sen. Chuck Schumer, D-N.Y.
In a series of Sunday television appearances, Lew warned that on Oct. 17, when he exhausts the bookkeeping maneuvers he has been using to keep borrowing, the threat of default would be imminent.
“I’m telling you that on the 17th, we run out of the ability to borrow, and Congress is playing with fire,” Lew said.
Lew said that while Treasury expects to have $30 billion of cash on hand Oct. 17, that money will be quickly exhausted in paying incoming bills, given that the government’s payments can run up to $60 billion on a single day.
Treasury issued a report Thursday detailing in stark terms what could happen if the government actually defaulted on its obligations to service the national debt.
“A default would be unprecedented and has the potential to be catastrophic,” the 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.
“If they don’t pay on the debt, that would cost us for generations to come,” said Mark Zandi, chief economist at Moody’s Analytics. Some Republicans, such as Rep. Steve King, of Iowa, dismiss the warnings about a government default as an exaggeration, suggesting U.S. credit won’t collapse and calling the talk “a lot of false demagoguery.”
In one promising development, a large chunk of the furloughed federal workforce is headed back to the Pentagon today.
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