Shutdown enters 2nd week as US scrambles to avert debt crisis

Shutdown enters 2nd week as US scrambles to avert debt crisis

With the US government shutdown entering its second week today, Democrats said they will try to convince Republicans to agree to a long-term USD 1 trillion debt-limit increase to avert the ominous prospect of an unprecedented debt default.

President Barack Obama has so far refused to negotiate with Republicans who are insisting that any government funding bill must somehow delay, defund or otherwise disrupt his showpiece healthcare programme dubbed 'Obamacare'.

Obama said he will not bow to Republicans' demands that he enter negotiations with them even risking a continued shutdown or the first-ever debt default in US history.

Republicans remain undeterred, saying they would neither raise the USD 16.7 trillion debt ceiling nor reopen the government without first winning concessions.

Democrats are hoping to get Republicans to agree to a long-term USD 1 trillion debt-limit increase to ensure that the government does not reach a point this month where it may be unable to pay its bills, risking its first default.

Democrats say they may also accept a short-term bill, perhaps lasting only weeks, if necessary to avoid going over the brink.

The Democratic push on the debt limit came as the shutdown entered its eighth day with no solution in sight.

The White House has already warned that the looming prospect of a debt default by the world's largest economy was a "terrible" scenario that would harm America's democracy and global stature.

Officials said the political deadlock on the federal budget could have potentially catastrophic consequences for the world economy and could trigger a financial crisis worse than 2008 when the US plunged into its most severe recession since the Great Depression of the 1930s that soon engulfed the globe.

The shutdown has left federal employees on unpaid leave and closed national parks, tourist sites, official websites, office buildings, and more establishments since last Tuesday.

Congress must act by October 17 in order to avoid a debt default by the US government which will run out of cash on that day for the first time in US history unless its debt ceiling is raised.

Meanwhile, a Washington Post-ABC News survey found that 70 per cent of Americans disapprove of the way Republicans are handling budget negotiations, up from 63 per cent last week, with 24 per cent approving.

Most of the 400,000 Pentagon staff have been ordered to return to work by Defence Secretary Chuck Hagel under the Pay Our Military Act.

Republicans who control the House of Representatives have refused to approve the budget, saying they would only do so if the healthcare programme was delayed or stripped of funding.

Obama and the Democrats have refused, noting the law was passed in 2010, subsequently approved by the Supreme Court, and was a central issue in the 2012 election which Obama won.

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