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Tags: debt | default | shutdown

Debt Stalemate Breeds Frustration; US Heads Toward 'Dangerous Moment'

Debt Stalemate Breeds Frustration; US Heads Toward 'Dangerous Moment'

By    |   Saturday, 12 October 2013 09:36 PM EDT

With the U.S. headed toward the "dangerous moment" of default, uncertainty over the government shutdown and debt ceiling continues, after talks to resolve the issues folded Saturday between the Senate's top two leaders.

Besides keeping some 350,000 federal workers idle for nearly two weeks, the stalemate prompted a GOP prediction that the United States might not make its credit obligations on Thursday. That led president of the World Bank to warn of an international financial "crisis."

"We are now five days away from a very dangerous moment," World Bank chief Jim Yong Kim said at the close of the annual World Bank-International Monetary Fund meetings in Washington. "The closer we get to the deadline, the greater the impact will be for the developing world."

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Senate Minority Leader Mitch McConnell of Kentucky and Democratic Majority Leader Harry Reid of Nevada met for 30 minutes on Saturday, with no resolution. Still, "we had a good meeting," McConnell told reporters. He made no further comment.

No additional talks were scheduled, a McConnell aide told Newsmax, but Republican Sen. Bob Corker of Tennessee said that the senators would "continue to talk over the weekend."

"Again, it is very evident that the White House is not going to be involved in negotiations, at least at this point they are not, and that the centerpiece is Reid and McConnell," Corker told CNN. "So I think all of us want to support those efforts, and hopefully they bear fruit over the weekend."

McConnell and Reid met for the first time since the partial government shutdown began 12 days ago, idling as many as 350,000 federal employees.

President Obama on Friday rejected the latest proposal from House Republicans to end the furloughs and extend the debt ceiling — and legislators were hoping that McConnell and Reid could come together to end the stalemate.

“Reid and McConnell are talking now, and those discussions continue so I see that as progress,” Senate Republican Whip John Cornyn of Texas told The Hill.

“There are a number of different elements,” he said. “The fact that they’re actually talking for the first time represents significant progress.”

Reid, however, insisted on a debt-ceiling bill that would reopen the government, raise its borrowing authority, and increase federal spending beyond the limits imposed by sequestration.

The latter condition drew fire from McConnell.

"We've got a $17 trillion debt now," the Republican senator told Newsmax in an exclusive interview on Friday. "We've got a debt that's as big as our economy, which makes us look a lot like a western European country.

"It’s unacceptable — and the American people oppose raising the debt ceiling unless we do something about the debt," McConnell added. "That's our continuing goal here in the Senate."

The senior legislators met after the Senate Republicans — as McConnell had predicted to Newsmax — defeated Reid's procedural motion on a "clean" debt-ceiling bill.

The legislation would have raised the nation's borrowing authority by $1.1 trillion, pushing further talks on the issue until after next year's congressional elections, without any budget reforms or savings.

"That, of course, isn't going to pass," McConnell predicted in the Newsmax interview. "That'll be defeated overwhelmingly by Republicans."

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After the 53-45 vote, which was along party lines, Reid was unrelenting in his attacks on the GOP. He needed seven Republicans to support his bill.

He charged that Republicans had begun seeking concessions on the president's healthcare law, but now their core issue was "to divert attention from the fools they've made of themselves on Obamacare.

"We need to have compromise, but we are not going to do that until the government reopens and we pay our bills," Reid warned at a news conference.

Mindful of the Thursday debt-limit deadline, Reid said that he would like to cut a deal "now."

"When I say 'now,' I mean in the next 48 hours," he said.

Then, Reid and other Senate Democratic leaders went to meet with Obama at the White House.

The session lasted a little more than an hour, and legislators departed without commenting on the meeting. The White House also provided no summary of the meeting.

For his part, Obama accused Republicans of practicing the politics of extortion.

"Manufacturing crises to extract massive concessions isn't how our democracy works, and we have to stop it," he said in his weekly radio and Internet address.

Further, Reid attacked a GOP proposal being developed by a bipartisan group of 12 senators headed by Susan Collins of Maine. The plan would extend the debt limit through Jan. 31 and finance the government for six months.

It also would have delayed for two years a medical-device tax that helps finance Obamacare, and it would subject millions of individuals eligible for subsidies to buy health insurance to stronger income verification.

Reid dismissed the Collins proposal, charging that the continuing resolution — or CR — treated reopening the government as a "concession," CNN reports.

Sen. Barbara Mikulski, the Maryland Democrat who chairs the Senate Appropriations Committee, told the Hill, "I admire Sen. Collins's intent, but her six-month CR presents too many problems."

But Collins called the reactions unfortunate, adding in a statement that negotiations "were constructive and give me hope that a bipartisan solution to reopen government and prevent default is within our reach."

Lawmakers in both parties said they were watching for the reaction to the political uncertainty by the financial markets when they reopen on Monday.

Meanwhile, Republican Rep. John Fleming of Louisiana, who is backed by the tea party, predicted that there was "definitely a chance that we're going to go past the deadline" set by Treasury Secretary Jack Lew for Congress to raise the nation's $16.7 trillion borrowing authority.

Lew has said that the United States would run out of adequate cash to pay all the country's bills as early as Thursday without a debt-cap increase.

And the Saturday developments led World Bank chief Kim to warn that the United States was headed toward peril as the deadline loomed.

"If this comes to pass, it could be a disastrous event for the developing world — and that, in turn, will greatly hurt the developed economies as well," he said. "I urge U.S. policymakers to avert this crisis."

It goes without saying, however, that the watchword on Capitol Hill was frustration, as members of both parties from both chambers lashed out at one another over the continued stalemate.

“The president is a pathetic leader," charged a clearly troubled Sen. Lindsey Graham, according to Politico. "He’s only engaged in the last couple of days. Every time you get close to getting a deal over here with our Democratic friends, they move the ball because some poll comes out.

"Our friends in the House apparently can’t muster the votes to send something over here to open up the government," Graham charged. "So it’s dysfunction at every level.

“You can blame us [Republicans], we’ve overplayed our hand, that’s for damn sure,” Graham said. “But their response, where the president and [Reid] basically shutting everybody out — and when you try to negotiate, they keep changing the terms of the deal … it’s very frustrating.

“This is a very frustrated Lindsey Graham,” the senator added. “Which is a very dangerous thing.”

Meanwhile, GOP Rep. Louie Gohmert of Texas told Fox News that "honest talk is exactly what we need."

He challenged Democrats to "stop the dishonesty. Harry Reid is saying that there's a bunch of firebrands and radicals in the House that have hijacked the party. That's not the case.

"The hijacking has been the U.S. Senate by left-wing radicals who want to keep spending grandchildren's money without any consequences," Gohmert said.

Utah Sen. Orrin Hatch, the ranking GOP member of the Senate Finance Committee, said that the defeated Reid proposal would have handed Democrats a "blank check" without any spending controls.

“No one wants the nation to default on its debt. I certainly don’t," Hatch said in a statement. "A debt-limit increase must include government reforms that address the root cause of America’s nearly $17 trillion debt — namely, our entitlement programs.

"To expect a $1.1 trillion blank check is to ignore the severe challenges our nation faces unless we get our debt under control," he said.

And Sen. James Inhofe said: "If we allow the nation to continue on its current path, it will only lead to economic destruction. Raising the debt ceiling without any common-sense solutions to reign in the federal government would be irresponsible and reckless."

“The President has already increased the debt limit five times since coming to office," the Oklahoma Republican's statement said. "Federal spending is continuing to spiral out of control, and if we do nothing to reign it in, our national debt will skyrocket to $25 trillion in the next decade.

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"Even the President agrees with those numbers," he added. "We cannot allow this to happen."

The Associated Press and Reuters also contributed to this report.

© 2022 Newsmax. All rights reserved.

With the U.S. headed toward the 'dangerous moment' of default, uncertainty over the government shutdown and debt ceiling continues, after talks to resolve the issues folded Saturday between the Senate's top two leaders.
Saturday, 12 October 2013 09:36 PM
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