Obama asks Boehner to lift threat of ‘chaos’

President wants vote to allow U.S. to borrow money

WASHINGTON • U.S. president barack Obama says he told John boehner, the House of representatives’ speaker, he is willing to negotiate with republicans on their priorities, but not under the threat of “economic chaos.”

Mr. Obama spoke to reporters at the White House Tuesday in the midst of the eighth day of a partial government shutdown and a few hours after calling Mr. boehner.

He says he urged the republican leader to hold a vote immediately to reopen the government. The White House says Mr. Obama also urged the Speaker to hold a vote that would allow the government to borrow more money.

Senate democrats are planning a vote this week to provide new borrowing, without new spending cuts republicans want. republicans, for their part, scoffed at dire warnings a government default would wreck U.S. and world economies. They say it is another case of hyperbole from an Obama administration that cried wolf about the likely impacts of automatic spending cuts and partially shutting down the government. egged on by republicans, democrats have agreed to so many exemptions to the shutdown — from letting most defence department employees return to work to covering full back pay for furloughed workers — they have mitigated much of the pain.

Some conservative activists gleefully say they have shown Americans can live without agencies republicans like the least, such as the environmental Protection Agency and the Internal revenue Service.

In the House, conservatives now are challenging the insistence of Jack Lew, the Treasury Secretary, the United States will no longer be able to borrow from Oct. 17, making a first government default imminent.

“I don’t think we’re ever go- ing to default,” said representative dennis ross of Florida.

“We’ll always service our sovereign debt.”

Not true, says Mr. Lew. He says there is no option to prevent default “if we don’t have enough cash to pay our bills.”

While the Treasury expects to have US$30-billion of cash on hand on Oct. 17, that money will be quickly exhausted in paying incoming bills, given the government’s payments can amount to US$60-billion on a single day, Mr. Lew said.

A sober analysis from Goldman Sachs, the banking, securities and investment firm, said Treasury’s cash balance could be depleted on any day after about Oct. 25.

“At that point, it is possible that the Treasury would need to cease making payments in order to conserve the little remaining cash they would still have on hand,” the analysis said.

Some of the more conservative republican House members still don’t buy it. “There’s no way to default,” said Justin Amash from Michigan. “There’s enough money coming into the Treasury to pay interest and to roll over principal.”

A default might delay Social Security cheques, benefits for military veterans and Medicare reimbursement to doctors. The last time congressional inaction posed the threat of default, in summer 2011, Treasury officials considered delaying payments due a particular day until enough incoming revenue was on hand to cover them all for that day.