In Budget Faceoff, Obama Warns of 'Economic Chaos'

AP, Pablo Martinez Monsivais
By ANDREW TAYLOR and JIM KUHNHENN

WASHINGTON -- A potential federal shutdown looming, President Barack Obama on Monday warned congressional Republicans they could trigger national "economic chaos" if they demand a delay of his health care law as the price for supporting continued spending for federal operations.

House Republican leaders were to meet Tuesday in hopes of finding a formula that would avoid a shutdown on Oct. 1 without alienating party conservatives who insist on votes to undercut the Affordable Care Act. Even more daunting is a mid- to late-October deadline for raising the nation's borrowing limit, which some Republicans also want to use as leverage against the Obama administration.

"Are some of these folks really so beholden to one extreme wing of their party that they're willing to tank the entire economy just because they can't get their way on this issue?" Obama said in a speech at the White House. "Are they really willing to hurt people just to score political points?"

The Republicans don't see it that way.

House Speaker John Boehner, who opposes the threat of a shutdown, said, "It's a shame that the president could not manage to rise above partisanship today." Obama, said Boehner, "should be working in a bipartisan way to address America's spending problem, the way presidents of both parties have done before," and should delay implementation of the health care law.

While some conservatives supported by the tea party have been making shutdown threats, Sen. Rand Paul of Kentucky said Monday that was "a dumb idea." At a community meeting in Louisville, he said, "We should fight for what we believe in and then maybe we find something in between the two. ... I am for the debate, I am for fighting. I don't want to shut the government down, though. I think that's a bad solution."

Obama timed his remarks for the fifth anniversary of the bankruptcy of Wall Street giant Lehman Brothers, a major early event in the near-meltdown of the U.S. financial system and a severe global recession that preceded his presidency. He used the occasion to draw attention to the still-recovering economy and to what he called a "safer" financial system now in place.

He delayed his remarks as authorities responded to the shootings that officials said left at least 13 people dead at the Washington Navy Yard just a few miles from the White House.

While unemployment has dropped to 7.3 percent from a high of 10 percent and the housing market has begun to recover, the share of long-term unemployed workers is double what it was before the recession, and a homebuilding revival has yet to take hold. A new analysis conducted for The Associated Press shows that the gap in employment rates between America's highest- and lowest-income families has stretched to its widest level since officials began tracking the data a decade ago.

Obama conceded the problems. "As any middle class family will tell you or anybody who's striving to get in the middle class, we are not yet where we need to be," he said.

Still, his National Economic Council argued his case for progress, issuing a report detailing policies that it said had helped return the nation to a path toward growth. Those steps ranged from the unpopular Troubled Asset Relief Program, or TARP, that shored up the financial industry and bailed out auto giants General Motors and Chrysler, to an $800 billion stimulus bill and sweeping new bank regulations. Of the $245 billion that the government injected into the banking system, virtually all of it has been paid back, the report noted.

"After all the progress that we've made over these last four and a half years, the idea of reversing that progress because of an unwillingness to compromise or because of some ideological agenda is the height of irresponsibility," Obama said. He reiterated his stance that he will not negotiate over the debt ceiling. Failure to raise it could lead to the first national default in U.S. history.

Conservative Republicans, on the other hand, say the health care law, which has yet to take full effect, will place a burden on businesses and the public and will damage the economy. As a result, they insist that it be starved of taxpayer money or at least delayed.

Chances are fading for a complicated GOP leadership plan that would allow the House to also vote to "defund Obamacare" but automatically separate the measures when delivering them to the Senate to ease the way for quick passage of a "clean" funding measure for delivery to Obama.

The next steps aren't clear, but one option under consideration is to accede to conservatives' demands to deliver to the Democratic Senate a combined bill that pays for government and defunds the health care law. The Senate would be virtually certain to strip away the attack on the health care law and bounce the funding measure right back to the House.

That scenario might frustrate conservatives, with the funding measure probably gaining enough votes to win passage in the House and proceed to the White House for Obama's signature.

Stopgap spending bills are usually routine, so the difficult path for the current one hardly inspires confidence for an even more important measure to raise the government's borrowing cap. Republicans want to use the debt limit measure as a mechanism to win further spending cuts on top of those they forced upon Obama two years ago.

It's not clear how the debt limit conundrum will be solved, though a time-tested recipe would be to add mostly symbolic reforms like a "no budget, no pay" proposal that worked early this year when House leaders orchestrated a debt limit increase that was intended to last through July or so but is now likely to suffice until mid-late October. The idea was that lawmakers wouldn't get paid if the chamber in which they served didn't pass a budget. It was a House GOP jab aimed at the Senate, which hadn't passed a budget since 2009. This year it did but there's been no effort to reconcile it with a competing House measure.

Obama intends to continue pressuring Congress with daily events this week, including a speech Wednesday to the Business Roundtable, an association of CEOs from the top U.S. companies, and a trip Friday to Kansas City to visit a Ford plant, where he will promote the strength of the auto industry.

Associated Press writer Bruce Schreiner in Louisville, Ky., contributed to this report.

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Evelyn

Obama's entire administration and his presidency has been the "height of irresponsibility"!

September 18 2013 at 6:00 PM Report abuse +1 rate up rate down Reply
soccerus

Middle class America has been dealing with economic chaos since Ronald Reagan and his different administrators introduced us to their trickle down disaster. The top 2% has enjoyed bliss, the rest of us-chaos

September 18 2013 at 4:11 AM Report abuse +7 rate up rate down Reply
Ange Purs

We've been warned about things a lot by Obama. I guess he must think we Americans are
just plain stupid. Every time he's asked a question, we get a history lesson about what he has done for us...in case we have been asleep for the past 5 yrs. Is this good leadership? Is this leadership that has value? Scare people to get them to go along with some particular view. Wonderful. Obama appears to be becoming more irrelevant with each new day.

September 18 2013 at 2:37 AM Report abuse -4 rate up rate down Reply
mac2jr

Echos of the Past - Part V

The Republicans and the TEA party want to eliminate $100,000,000,000 from the Federal Budget of about $600,000,000,000. Thus, if we do the calculations of say $50,000 per Federal employee, that means that we will put another 2,000,000 people out of work, and since each worker contributes to the economy to keep five to ten others working, that gives us about 10,000,000 more unemployed, which will RAISE LOCAL and STATE TAXES as the Welfare and Food Stamps and Medical and other 'life raft' costs increase.... It is currently being done in New Jersey by their Republican Governor, and the cost is being passed to the locals in the form of less teachers, less police, less firefighters, less sanitation workers, less and less and less, but higher taxes..... Ronald Reagan tried this, and the next five years saw MASSIVE TAX INCREASES..... Wake up America, the RICH are selling you out.....

September 18 2013 at 2:37 AM Report abuse +6 rate up rate down Reply
mac2jr

Echos of the Past - Part IV

"If congressional conservatives are serious about eliminating the deficit, they may have to cast some votes that will be very unpopular politically," said Matthew Green, a political scientist at Catholic University of America. "Many budget experts ... have noted, there is no realistic way that one can eliminate the deficit without both spending cuts and tax increases."

September 18 2013 at 2:35 AM Report abuse +2 rate up rate down Reply
mac2jr

Echos of the Past - Part III

John Pitney, a former House GOP aide who teaches political science at Claremont McKenna College in California, said they will learn that following through will come at a political price.

"Many of the freshmen may think that they can slash billions simply by going after 'waste, fraud and abuse,' " he said. "They will quickly learn that any genuine reduction in spending means that real people won't get jobs, contracts or services that they had been counting on. And they will yell. Loudly."

"It also means doing the unthinkable: raising taxes."

September 18 2013 at 2:34 AM Report abuse +3 rate up rate down Reply
mac2jr

Echos of the Past - Part II

"All money bills will be a problem for tea partiers," said Steven Smith, a political scientist at Washington University in St. Louis and co-author of "The American Congress." "The Republican leadership will be asking for votes for bills that are not as conservative they want, particularly once the bills are negotiated to be acceptable to the Senate and president."

The Budget. There isn't a Republican freshman who doesn't want to balance it. Yet Douglas Holtz-Eakin, a former Congressional Budget Office director under President George W. Bush, lists crafting a budget resolution as the single most challenging task for lawmakers.

"It is hard to put together a budget," said John Feehery, a spokesman for former Republican House Speaker Dennis Hastert. "It is harder to put together a budget that passes the laugh test. It is impossible to pass a budget that balances without raising taxes."

September 18 2013 at 2:32 AM Report abuse +4 rate up rate down Reply
mac2jr

Echos of the Past....

"New Republican House members had barely settled in for freshman orientation this week when their leader delivered a disorienting message.

Sure you campaigned to slash out-of-control government spending, incoming Speaker of the House John Boehner said, but one of the first votes you will cast will be to raise the debt ceiling.

"We're going to have to deal with it as adults," the head of the Republican establishment said. "Whether we like it or not, the federal government has obligations and we have obligations on our part."

September 18 2013 at 2:31 AM Report abuse +3 rate up rate down Reply
mac2jr

Which President Quiz

Nixon, Carter, Carter, Reagan, Bush I, Bush I, Bush II, Obama

Quiz time.

1) Which President started the EPA

2) Which President installed Solar panels on the roof of the White House

3) Which President tried to get the USA to a minimum of 20% alternative energy by the year 2000

4) Which President removed the Solar panels from the White House and did away with alternative energy.

5) Which President supplied farm equipment to Afghanistan for growing dope

6) Which President created NAFTA

7) Which President created CAFTA

8) Which President placed two women on the Supreme Court

September 18 2013 at 2:26 AM Report abuse +2 rate up rate down Reply
mac2jr

RICHARD NIXON
The White House,
February 6, 1974.

Nixon's Plan For Health Reform, In His Own Words

http://www.kaiserhealthnews.org/Stories/2009/September/03/nixon-proposal.aspx

TRy reading the full text... It is an eye opener...

September 18 2013 at 2:25 AM Report abuse +3 rate up rate down Reply