Obama Expects Congress to Raise Debt Ceiling Before Deadline

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October 05, 2013 4:31 AM

U.S. President Barack Obama says he expects Congress to increase the countrys borrowing limit before a mid-October deadline, ensuring that the United States does not default on its financial obligations.

With the U.S. government in the fifth day of a partial shutdown, it also faces running out of money to pay its bills on October 17, including interest on government bonds held by China, Japan and other overseas investors.

In a wide-ranging interview with The Associated Press released Saturday, Obama said he expects Congress will increase the countrys $16.7 trillion debt ceiling so the United States can borrow more money.

America has never not paid its bills, and Ive said repeatedly that thats not something anybody should be threatening, he said. The potential default of the United States, where we are essentially deadbeats, thats never happened.

Obama, a Democrat in his fifth year at the White House, is locked in a political stalemate with Republican opponents in Congress over government spending policies and implementation of his signature legislative achievement: wide-ranging health care changes that are now taking effect.

Willing to negotiate

The president said he is willing to negotiate changes to the health law and reduce spending, but not until Congress agrees to end the shutdown and raises the debt ceiling without conditions. Republicans opposed to the health care reforms are trying to end funding for or delay that program, which is commonly known in the U.S. as Obamacare.

Opposition Republicans have insisted that they will only approve a spending bill to reopen the government if Obama and Democratic leaders agree to negotiations on the separate issue of the health care plan.

With Congress deadlocked, a lack of funds has halted or sharply curtailed a wide variety of government services. All national parks, museums and the Library of Congress have been closed since Tuesday, and scientific research at the National Institutes of Health and the space agency, NASA, has been almost entirely suspended. These actions prompted government agencies to order about 800,000 federal workers on furlough status sending them home without pay and barring them from remaining at their jobs, even voluntarily.

Military spending

U.S. military forces have not been directly affected by furloughs, although the Department of Defense sent home 400,000 civilian employees before recalling them to return to work next week. Some federal agencies and programs, such as the Voice of America, have been ordered to continue their work even with a portion of their workforce on furlough. Air traffic controllers, Border Patrol agents and many food inspectors also are still working.

Despite the focus on the funding shortage resulting from the stalemate in Congress, it now appears that all furloughed workers will eventually be paid for the time they spent at home, thanks to separate action making its way through Congress. Repaying hundreds of millions of dollars to employees whose wages were interrupted, however, is a much smaller issue than the dispute over the debt ceiling.

The U.S. with the worlds biggest economy, has never defaulted failed to pay its bills, in effect. Most analysts do not expect that will happen this time, either, but the uncertainty that currently prevails could cause substantial turmoil in world financial markets. A protracted congressional debate in 2011 over increasing the borrowing limit did not shut off government services, but it roiled international financial markets and noticeably slowed economic growth in the U.S.

U.S. Secretary of State John Kerry gestures during a news conference at the Asia Pacific Economic Cooperation (APEC) ministerial meeting in Nusa Dua, Bali island Oct. 5, 2013.

U.S. Secretary of State John Kerry gestures during a news conference at the Asia Pacific Economic Cooperation (APEC) ministerial meeting in Nusa Dua, Bali island Oct. 5, 2013.

Some fear that could occur again in the next two weeks. U.S. Secretary of State John Kerry said Saturday he does not think that will happen, but he warned that a prolonged or repeated political crisis in Washington could weaken the U.S. globally.

On Capitol Hill, Republicans who control the House of Representatives have offered to approve funding for individual agencies, but the U.S. Senate, controlled by Democrats, has insisted there must be overall funding legislation to reopen the entire government. The Republicans say they will not consider an overall budget unless that includes changes in the health care law, which was previously approved by both houses of Congress and ruled constitutional by the U.S. Supreme Court.


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