Republicans raise prospect of US debt default as government shutdown continues

Updated

Almost a week into the US government shutdown, Republican speaker John Boehner has upped the ante, saying he will not pass measures to pay America's debts without concessions from president Barack Obama.

Last week there were reports Mr Boehner would not risk a government debt default, but he has now put that squarely on the table.

"We are not going to pass a clean debt limit increase," he told ABC America's This Week program.

"I told the president there's no way we are not going to file when the votes are not in the House to pass a clean debt limit.

"And the president is risking default by not having a conversation with us."

Mr Boehner says it is time for America to deal with its problems.

"How can you raise the debt limit and do nothing about the underlying problem. We've spent more than what we've brought in for 55 of the last 60 years," he said.

"This year the federal government will have more revenue than any year in the history of our country and yet we're still going to have a nearly $700 billion budget deficit.

"We are squandering the future for our kids and our grand kids by not dealing with this problem."

US treasury secretary Jack Lew says it would be "dangerous" and "reckless" for the US not to pay its bills.

He says they're well aware that the US ran out of money in May.

"Since May we've been creating some room to borrow by using what are called extraordinary measures," he said on CNN's State Of The Union.

"They've been used so many times they're not as extraordinary as they used to be."

Mr Lew says the US will run out of its ability to borrow money on October 17, and with only $US30 billion cash in hand to meet obligations that can run to $US60 billion a day, it will quickly face default.

"I'm telling you that on the 17th, we run out of our ability to borrow, and Congress is playing with fire," he said.

"If they don't extend the debt limit, we have a very, very short window of time before those scenarios start to be played out."

The $US16.7 trillion US statutory debt ceiling has come increasingly into focus with the two sides deadlocked in a legislative fight originally centred on Republican efforts to defund the Affordable Care Act, Obama's signature health care law.

Political impasse set to drag on

The US government was forced to shut down on Tuesday for the first time in 17 years after Congress failed to pass a stopgap spending measure to fund government operations.

The House refused to pass a spending bill that did not include the measure to defund Obamacare, and the Democratic-controlled Senate would vote only on a bill stripped of the measure.

To reinforce the bizarre place that US politics finds itself in, Democrats are taking to quoting Republican president Ronald Reagan.

"It really captures very much what I think the risk is and I quote - 'the full consequences of a default or even the serious prospect of default by the United States are impossible to predict and awesome to contemplate'," Mr Lew said.

Sorry, this video has expired Video: Michael Vincent reports on the risk of debt default (ABC News)

In a sign the impasse was expected to continue, the Pentagon on Saturday announced it will recall most of its furloughed civilian employees.

The House, meanwhile, unanimously passed a bill to retroactively pay the hundreds of thousands of furloughed government workers, in a bid to ease some of the pressure from an unhappy public.

Mr Obama has insisted he will not negotiate with Republicans until they pass a temporary spending bill reopening the government and agree to raise the debt ceiling.

"For as reckless as a government shutdown is, an economic shutdown that comes with default would be dramatically worse," he said in a radio message on Saturday.

He said there were enough Republican and Democratic votes in the House to "end this shutdown immediately".

Mr Boehner has blamed the crisis on Mr Obama's refusal to negotiate, and insisted he would not budge without what he described as a "conversation" on spending.

ABC/AFP

Topics: world-politics, business-economics-and-finance, economic-trends, united-states

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