Belfast Telegraph

US spending impasse continues

Republicans and Democrats have hit an impasse in the US senate over spending in their last-ditch struggle to avoid a debt default in just four days and end a partial government shutdown that enters its third week.

After inconclusive talks between president Barack Obama and House Republicans, senate majority leader Harry Reid and minority leader Mitch McConnell took charge in a bid to end the crises - although a conversation on Sunday afternoon failed to break the stalemate..

"Americans want Congress to compromise," Mr Reid said at the start of a rare Sunday session in the senate, during which he pressed for a long-term budget deal.

The two cagey negotiators are at loggerheads over Democratic demands to undo the automatic, across-the-board spending cuts to domestic and defence programs that Republicans see as crucial to reducing the nation's deficit.

Mr McConnell insisted that a solution was readily available in the proposal from a bipartisan group of 12 senators, led by Republican senator Susan Collins and the Democrat Joe Manchin, that would re-open the US government and fund it at current levels for six months while raising the debt limit through to January 31.

"It's time for Democrat leaders to take 'yes' for an answer," Mr McConnell said in a statement.

The US government has been partially shut since October 1 because of congress' failure to pass a normally routine temporary spending bill. Separately, Mr Obama wants congress to extend the government's borrowing authority - another matter that usually had been routine.

The latest snag comes as 350,000 federal workers remain idle, hundreds of thousands more work without pay and an array of government services, from home loan applications to environmental inspections, remained on hold on the 13th day of the shutdown.

Last week, the effects of the shutdown reached businesses, such as concessions and hotels near federal parks, that depend on government programmes.

Many national parks and monuments remain closed, drawing a protest at the National World War Two Memorial on Sunday that included Tea Party-backed conservative lawmakers who had unsuccessfully demanded defunding of Mr Obama's three-year-old signature health care law in exchange for keeping the government open.

The prospect of the United States defaulting on its financial obligations on Thursday if congress fails to raise the borrowing authority above the 16.7 trillion dollar (£10.45 trillion) debt limit is unnerving the world's economies.

Christine Lagarde, the International Monetary Fund's managing director, spoke fearfully about the disruption and uncertainty, warning of a "risk of tipping, yet again, into recession" after the fitful recovery from the 2008 global recession.

The reaction of world financial markets and the Dow Jones on Monday will influence any congressional talks.

Congress is racing the clock to get a deal done, faced with time-consuming Senate procedures that could slow legislation, likely opposition from hardcore conservative Tea Party-backed politicians, and certain resistance in the Republican-led House of Representatives before a bill gets to Mr Obama.

Politically, Republicans are reeling, bearing a substantial amount of the blame for the government shutdown and stalemate, according to recent polls..

"We're in a free-fall as Republicans, but Democrats are not far behind," said Republican senator Lindsey Graham, in warning Democrats about seizing on the Republicans' bruised brand as leverage to extract more concessions.

McConnell and Republicans want to continue current spending at 986.7 billion dollars (£618 billion) and leave untouched the new round of cuts in January, commonly known as the sequester, that would reduce the amount to 967 billion dollars (£605 billion). Democrats want to find a way to undo the reductions, plus a long-term extension of the debt limit increase and a short-term spending bill to reopen the government.