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Obama cuts Asia trip short as shutdown continues

Obama cuts Asia trip short as shutdown continues

GOVERNMENT GRIDLOCK: U.S. President Barack Obama delivers remarks alongside Americans (unseen) the White House says will benefit from the opening of health insurance marketplaces under the Affordable Care Act. Photo: Reuters

By Andy Sullivan and Thomas Ferraro

WASHINGTON (Reuters) – President Barack Obama on Wednesday scaled down a long-planned trip to Asia, as a U.S. government shutdown entered a second day with no end in sight to the funding row in Congress that triggered it.

Obama is expected to leave on Saturday for summit meetings in Indonesia and Brunei. Malaysian media quoted Prime Minister Najib Razak as saying he would now skip a subsequent visit to Kuala Lumpur. His last stop, in the Philippines, also now looks in question.

The president would thus be able to return home just days before an even bigger crunch in Congress, which will put the United States at risk of defaulting on its debts if it does not raise the U.S. public debt ceiling.

The fight between Obama’s Democrats and the Republicans over the government’s borrowing power is rapidly merging with the standoff over everyday funding, which has forced the first government shutdown in 17 years and forced hundreds of thousands of federal employees to take unpaid leave.

The White House announcement followed a fruitless day on Capitol Hill, with Congressional Democrats and Republicans coming no closer to resolving their differences.

Obama accused Republicans of taking the government hostage to sabotage his signature healthcare law, the most ambitious U.S. social program in five decades, passed three years ago.

Republicans in the House of Representatives view the Affordable Care Act as a dangerous extension of government power, and have coupled their efforts to undermine it with continued efforts to block government funding. The Democratic-controlled Senate has repeatedly rejected those efforts.

The standoff has raised new concerns about Congress’s ability to perform its most basic duties and threatens to hamper a still fragile economic recovery.

“This is a mess. A royal screw-up,” said Democratic Representative Louise Slaughter of New York.

LANDMARKS CORDONED OFF

As police cordoned off landmarks such as the Lincoln Memorial, and government agencies stopped functions ranging from cancer treatments to trade negotiations, Republicans in the House moved to restore funding to national parks, veterans’ care and the District of Columbia, the capital.

An effort to pass the three bills fell short on Tuesday evening, but Republicans plan to try again on Wednesday. They are likely to be defeated by the Democratic-controlled Senate.

“That’s important – a park? How about the kids who need daycare?” said Democratic Representative Sander Levin of Michigan. “You have to let all the hostages go. Every single one of them.”

The shortening of the Asia trip, designed to reinforce U.S. commitment to the region, is the first obvious international consequence of the troubles in Washington. There was no immediate confirmation from the White House that plans had been changed.

“They’ve shut down the government over an ideological crusade to deny affordable health insurance to millions of Americans,” Obama said on Tuesday.

Republicans said Obama could not complain about the impact of the shutdown while refusing to negotiate. “The White House position is unsustainably hypocritical,” said Michael Steel, a spokesman for House Speaker John Boehner.

A Reuters/Ipsos poll indicated that 24 percent of Americans blamed Republicans, while 19 percent blamed Obama or Democrats. Another 46 percent said everyone was to blame.

VETERANS PASS BARRICADES

Republicans said their latest proposal would help elderly veterans who earlier on Tuesday pushed past barricades at the National World War II Memorial to get into the site.

“They’re coming here because they want to visit their memorial, the World War II memorial. But no, the Obama administration has put barricades around it,” said Republican Representative Mike Simpson of Idaho.

All three bills won support from a majority of the House, but fell short of the two-thirds vote needed to pass under special rules that allow quick action. Republican leaders plan to bring up the bills for a regular vote on Wednesday. Obama said he would veto the bills if they reached his desk.

The veterans in question had gotten in to the memorial with help from several Republican lawmakers. But they did not seem interested in taking sides.

“It’s just like a bunch of little kids fighting over candy,” said George Atkinson, an 82-year-old veteran of the Korean War. “The whole group ought to be replaced, top man down.”

The selective spending plan appeared to temporarily unite Republicans, heading off a split between Tea Party conservatives who pushed for the government funding confrontation and moderates who appear to be losing stomach for the fight.

Representative Peter King, a New York moderate, estimated that more than 100 of the chamber’s 232 Republicans would back Obama’s demand to restore all government funding without conditions. That would be enough to easily pass the House with the support of the chamber’s 200 Democrats.

The shutdown closed landmarks including access to the Grand Canyon and pared the government’s spy agencies by 70 percent. In Washington, the National Zoo shut off a popular “panda cam” that allowed visitors to view its newborn panda cub online. In Pennsylvania, white supremacists had to cancel a planned rally at Gettysburg National Military Park.

MARKET REACTION

Stock investors appeared to be taking the news in stride on Tuesday, with investors confident a deal could be reached quickly. The S&P 500 closed up 0.8 percent and the Nasdaq Composite gained 1.2 percent.

But the U.S. Treasury was forced to pay the highest interest rate in about 10 months on its short-term debt as many investors avoided bonds that would be due later this month, when the government is due to exhaust its borrowing capacity.

A week-long shutdown would slow U.S. economic growth by about 0.3 percentage points, according to Goldman Sachs, but a longer disruption could weigh on the economy more heavily as furloughed workers scale back personal spending.

The last shutdown in 1995 and 1996 cost taxpayers $1.4 billion, according to congressional researchers.

The political crisis has raised fresh concern about whether Congress can meet a mid-October deadline to raise the government’s $16.7 trillion debt ceiling. Some Republicans see that vote as another opportunity to undercut Obama’s healthcare law.

Failure to raise the debt limit would force the United States to default on its obligations, dealing a blow to the economy and sending shockwaves around global markets.

A 2011 standoff over the debt ceiling hammered consumer confidence and prompted a first-ever downgrade of the United States’ credit rating.

Analysts say this time it could be worse. Lawmakers back then were fighting over how best to reduce trillion-dollar budget deficits, but this time they are at loggerheads over an issue that does not lend itself to compromise as easily: an expansion of government-supported health benefits to millions of uninsured Americans.

Republicans have voted more than 40 times to repeal or delay “Obamacare”, but they failed to block the launch of its online insurance marketplaces on Tuesday. The program had a rocky start as government websites struggled to cope with heavy online traffic.

“What I’m hearing from my constituents at home is if this is the only way to stop the runaway train called the federal government, then we’re willing to try it,” said Texas Senator John Cornyn, the second-ranking Republican in the Senate.

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