US President Barack Obama and Republicans discuss debt deadlock

No agreement but 'positive' meeting about offer to extend debt limit in return for spending talks

PUBLISHED : Friday, 11 October, 2013, 10:39am
UPDATED : Saturday, 12 October, 2013, 3:01am

US President Barack Obama and Republicans in the House of Representatives are exploring whether they can end a budget stand-off that has triggered a partial government shutdown and put Washington on the verge of an economy-jarring federal default.

Obama was holding a White House meeting yesterday with Republican senators after the two sides held late night discussions on Thursday night.

No agreement was reported and plenty of hurdles remained, but both sides cast their meeting positively as, for the first time, hopes emerged that a resolution might be attainable, even if only a temporary one.

House Speaker John Boehner brought a proposal to Thursday's White House meeting to extend federal borrowing authority and avoid default through to November 22, conditional on Obama's agreeing to negotiate over spending cuts and the government shutdown. But participants said the discussion expanded to ways to quickly end the separate federal government shutdown, which entered its 11th day yesterday as Congress has failed to pass an emergency funding bill.

Congress must also approve how much money the federal government can borrow. Normally this is routine, but Republicans had been insisting on cuts and changes to Obama's 2010 health care overhaul law and other programmes as the price for reopening government and extending the debt limit past next Thursday's deadline.

Boehner's offer indicates some movement away from that strategy, but Republicans claimed victory on one front, noting that they were in negotiations with a president who had said repeatedly there would be none until the government was open and default prevented.

Republican Congressman Tom Cole, who is close to Boehner, said, "If he [Obama] signals back that he is willing to sign a short-term deal" on the debt limit, Republicans would move to negotiate a reopening of the government.

"I don't know why you couldn't have a short term [increase] in the debt ceiling secured this weekend or very early next week," said Cole, who is a House Republican deputy whip.

A White House statement about Thursday's meeting said "no specific determination was made" but added: "The president looks forward to making continued progress with members on both sides of the aisle."

Senate Democratic leader Harry Reid said yesterday he was open to hearing proposals, but he doesn't like the idea of extending US borrowing authority only to November 22.

As the crisis continied, preparations were being made in the event of default.

Investment banking giant JPMorgan Chase said it had sold all of its exposure to short-term US government debt out of its money market funds, following a similar move by other money- market mutual-fund managers.

Additonal reporting by Reuters