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Obama, congressional leaders to meet with shutdown in its second day

By Richard Cowan and Jeff Mason

WASHINGTON | Wednesday, 2 Oct 2013

Oct 2 (Reuters) – President Barack Obama scaled back a long-planned trip to Asia on Wednesday and planned a meeting with Democratic and Republican leaders in Congress that both sides said was unlikely to yield an end to the government shutdown.

Obama plans to meet at the White House at 5:30 p.m. (2130 GMT) with the four top leaders in Congress – House of Representatives Speaker John Boehner, House Democratic Leader Nancy Pelosi, Senate Democratic Leader Harry Reid and Senate Republican Leader Mitch McConnell.

But neither side appeared to be willing to give any ground as the shutdown continued for a second day. Republicans want to tie continued government funding to measures that would undercut Obama’s signature healthcare law, while Obama and his Democrats say that is a non-starter.

“We’re a little confused as to the purpose of this meeting,” said McConnell spokesman Don Stewart.

A Senate Democratic aide said the meeting is unlikely to bring any breakthroughs.

The partial shutdown, which took effect Monday at midnight (0400 GMT Tuesday), has raised questions about Washington’s ability to carry out its most essential duties. Though a short-term shutdown would do relatively little damage to the world’s largest economy, global markets could be roiled if Congress also fails to raise the debt limit before borrowing authority runs out in coming weeks.

Though military troops and other “essential” workers have stayed on the job, the shutdown has thrown hundreds of thousands of federal employees out of work, shuttered landmarks like the Grand Canyon and prevented some cancer patients from receiving cutting-edge treatment.

The U.S. Army’s top general said it was significantly harming day-to-day operations, and intelligence leaders say it is undermining their ability to monitor threats. A Federal Reserve official said it could delay the central bank’s ability to assess whether its monetary stimulus efforts are still needed.

The setback to the Asia trip, designed to reinforce U.S. commitment to the region, is the first obvious international consequence of the troubles in Washington.

Obama scuttled two stops on a planned four-country tour and left visits to two other countries up in the air. He was due to leave on Saturday and return a week later.

Secretary of State John Kerry will instead visit Malaysia and the Philippines. Obama is weighing whether to attend diplomatic summits in Indonesia and Brunei, a White House official said.

Despite the disruption, Boehner’s Republicans have failed to derail Obama’s controversial healthcare law, which passed a milestone on Tuesday when it began signing up uninsured Americans for subsidized health coverage.

Though some moderate Republicans have begun to question their party’s strategy, Boehner so far has kept them united behind a plan to offer a series of small bills that would re-open select parts of the government.

The House is expected to vote later on Wednesday and Thursday on measures that would fund veterans care, medical research, national parks, the District of Columbia and the Army Reserve. The measures are likely to be defeated in the Democratic-controlled Senate, and Obama said he would veto them if they reached his desk.

“It’s time for Republicans to stop throwing one crazy idea after another at the wall in the hopes something will stick,” Democratic leader Reid said on the Senate floor.

Reid told Republicans he would engage in talks about tax reform, farm policy and other pressing issues that Congress has failed to address after Republicans agreed to re-open the government without conditions.

Republicans seemed to be less than thrilled with that idea.

“Offering to negotiate only after Democrats get everything they want is not much of an offer,” Boehner spokesman Michael Steel said.

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


The shutdown fight is rapidly merging with a higher-stakes battle over the government’s borrowing power that is expected to come to a head soon.

Treasury Secretary Jack Lew has said the United States will exhaust its borrowing authority no later than Oct. 17.

The government could have difficulty paying pension checks, interest charges and other bills after that point.

Many Republicans see the debt limit vote as another opportunity to undercut Obama’s healthcare law or extract other concessions – an approach that business groups say could lead to disaster.

“You can re-litigate these policy issues in a political forum, but they shouldn’t use the threat of causing the U.S. to fail on its … obligations to repay on its debt as a cudgel,” Goldman Sachs chief executive Lloyd Blankfein told reporters after he and other financial-industry executives met with Obama.

Stock investors on Wednesday appeared to show growing anxiety over the standoff after taking the news in stride on Tuesday. The Standard & Poor’s 500 Index .SPX was down 0.32 percent and the Nasdaq Composite Index .IXIC was down 0.22 percent.

A short-term shutdown would slow U.S. economic growth by about 0.2 percentage points, Goldman Sachs said on Wednesday, but a weeks-long disruption could weigh more heavily – 0.4 percentage points – as furloughed workers scale back personal spending.

The last shutdown in 1995 and 1996 cost taxpayers $1.4 billion, according to congressional researchers. (Additional reporting by Susan Heavey, Patricia Zengerle, Thomas Ferraro and Mark Felsenthal in Washington, Ann Sahir in San Francisco and Adrian Croft in Brussels; Writing by Andy Sullivan; Editing by Tim Dobbyn and Jackie Frank)