Still no deal as Obama and Republicans push to end funds crisis

US President Barack Obama and Republican leaders appeared ready to end a political crisis that has shuttered much of the US government and pushed the country dangerously close to default after meeting at the White House last night.

No deal emerged from the 90-minute meeting, but talks continued into the night in an effort to reopen the government and extend the government’s borrowing authority beyond an October 17th deadline. One senior Republican said an agreement could come today, though hurdles remain.

The plummeting standing of congressional Republicans in public opinion polls helped spur a move toward ending the standoff, Oklahoma Republican Representative James Lankford said on CNN last night. The latest, an NBC-Wall Street Journal survey published yesterday, showed the public blaming Republicans by a 22-point margin - by 53 to 31 per cent.

The president’s meeting with Republican leaders was the first sign of a thaw in a 10-day stand-off that has weighed on financial markets and knocked hundreds of thousands of federal employees out of work.

"It was a very adult conversation," said Republican Representative Hal Rogers, who attended the meeting. "Both sides said they were there in good faith."

Republicans in the meeting offered to extend the government’s borrowing authority for several weeks, temporarily putting off a default that otherwise could come as soon as next week. Mr Obama pushed to also reopen government operations that have been closed since October 1st.

Significantly, Republicans seemed to be steering clear of the restrictions on Mr Obama’s healthcare reforms and spending that prompted the crisis in the first place. Instead, negotiations centred on how far to extend the debt limit and how much funding they would provide the government with when it opens, according to Republicans.

The two sides are working on "defining parameters to see if we can make progress", said Republican representative Pete Sessions, a member of the leadership.

“The president looks forward to making continued progress with members on both sides of the aisle,” the White House said in a statement.

Significant shift

The proposal is a significant shift for Republicans, who had hoped to use the threat of a shutdown and a default to undermine Mr Obama’s healthcare law.

But they have been hammered in opinion polls and pressured by allies in the business community who worry the brinkmanship is killing jobs and slowing the economy. Republicans worry that the stand-off could imperil lawmakers in competitive districts, giving Democrats an increased chance of winning control of the House next year.

Now Republicans hope a short-term debt-limit extension, perhaps until the middle or end of November, will buy time to seek spending cuts, a repeal of a medical-device tax, or other measures they say are needed to keep the national debt at a manageable level.

Conflicting reports of the outcome of the meeting sent immediate ripples through financial markets. US equity index futures tracking the S&P 500 index dropped after a report that Obama had rejected the Republican offer, but rose when details of the meeting trickled out. Major US equity indexes closed 2 per cent higher earlier yesterday on hopes of a deal.

Signature accomplishment

The crisis began in late September when Republicans tied continued government funding to measures that would undercut the Affordable Care Act, Mr Obama’s signature legislative accomplishment.

The gambit didn’t work, as “Obamacare” unveiled its online health-insurance exchanges on October 1st even as much of the rest of the government shut down. Even so, the exchanges have been plagued by serious technical problems unrelated to the shutdown.

In recent days, Republican leaders have emphasised other goals, such as reining in the retirement and health benefit programmes that pose a long-term threat to the country’s fiscal health.

For the first time in weeks, lawmakers from both parties predicted they would be able to resolve their differences.

"Both sides will be able to claim victory," said Democratic Representative Chaka Fattah of Pennsylvania.

Many hurdles remain. Mr Obama has said he will not negotiate on anything until Republicans agree to reopen the government and remove the threat of immediate default.

Rank-and-file Republican conservatives who remain focused on defeating “Obamacare” also could reject the deal. Even if disaster is averted for now, the entire dispute could come to the fore again when the temporary agreement expires.

Reuters