US shutdown: Obama ‘will not negotiate with extremists’

The US president has held firm that he will not make concessions on the healthcare reform, dubbed by his opponents as “Obamacare”, which came into effect on Tuesday.

However, this means that there is still no sign of an agreement on the US federal budget, which was also meant to come into effect on Tuesday and has been blocked by Republicans, and specifically a group of 50 from the Tea Party, the “extreme” Republican faction, opposed to Obamacare in its current form.

If we get in the habit where… an extremist wing of one party… are allowed to extort concessions… then any president who comes after me… will find themselves unable to govern effectively. Barack Obama

This led to federal government being ‘shutdown’ on Monday night, leading to 800,000 workers being put on unpaid leave and many federal run institutions, such as national parks and large parts of NASA.

‘Common sense’

This standstill between the Democrats, who dominate the Senate, and the Republicans, who dominate the House of Representatives, does not show any sign of being resolved.

Read more: US government shuts its doors - so what next?

The White House released a statement on Wednesday saying: “The House could act today to reopen the government and stop the harm this shutdown is causing to the economy and families across the country.

“The president remains hopeful that common sense will prevail.”

Divided government

But House speaker John Boehner, a Republican (pictured, below), complained to reporters that the reason the situation was not being resolved was because President Obama was “not negotiating”.

All we are asking for here is a discussion and fairness for the American people under Obamacare. John Boehner

“The president reiterated one more time tonight, that he will not negotiate, we have divided government, Democrats control the White House and the Senate, Republicans control the House.

“We sent four different proposals over to our Democrat colleagues in the Senate, they rejected all of them, we have asked to go to conference, to sit down and try to resolve our differences, they will not negotiate.

“We had a nice conversation, polite conversation, but at some point, we have got to allow the process our founders gave us to work out.”

However, Barack Obama hit back at the Republican party, saying he would “not negotiate with extremists”.

“Until we get that done, until we make sure that congress allows treasury to pay for things that congress itself already authorised, we are not going to engage in a series of negotiations.

“And the reason, John, is very simple. If we get in the habit where a few folks, an extremist wing of one party, whether it’s Democrat or Republican – are allowed to extort concessions – based on a threat of undermining the full faith and credit of the United States, then any president who comes after me, not just me, will find themselves unable to govern effectively.”

His team have also taken to Twitter to campaign at what they are calling “Boehner’s Shutdown”.

Obamacare

The central issue for Republicans, and even more so far the Tea Party faction of around 50 Republicans, is Obamacare – which was brought into law three years ago.

The legislation, which provides subsidised healthcare for those who can’t afford it, is rejected by Republicans as some form of “creeping Communism”.

We are locked in tight on Obamacare. Harry Reid

“All we are asking for here is a discussion and fairness for the American people under Obamacare,” Mr Boehner said.

Democrats accuse the Republicans of using blackmail to get their way of an law they don’t like, but also don’t have enough of a majority to repeal.

Democrat Harry Reid, the Senate’s majority leader, said: “This is all focused on Obamacare, this is all it’s about, and as I’ve said before and I’ll tell each of you here tonight, they did the same thing to social security, they did the same thing to Medicare, and they’re trying to do the same thing to Obamacare.

“Obamacare is another social security, it’s another Medicare programme, it’s something that is a signature issue of this administration and Nancy Pelosi and Harry Reid worked hard to get it done.

“We’re happy its done, and one thing we made very clear in that meeting – we are locked in tight on Obamacare.”

Despite the efforts of extremists in the House of Representatives, @Obamacare is not shut down: http://t.co/VRb7p0zQq1

— Barack Obama (@BarackObama) October 1, 2013

Day two of @SpeakerBoehner‘s shutdown. Donâ??t put our economy or the American people through this any longer: #EnoughAlready

— Barack Obama (@BarackObama) October 2, 2013

“Nobody gets to hurt our economy and hard-working families over a law you don’t like.” â??President Obama #EnoughAlready

— Barack Obama (@BarackObama) October 1, 2013

Fears now are turning to the impact this shutdown will have on the US and global economy if it lasts more than just a few days.

Financial markets responded sharply to the issue on Wednesday. The Dow Jones industrial average ended the day down 58.56 points, or 0.4 percent, at 15,133.14 points.

The Standard & Poor’s 500 index fell 1.13 points, or 0.1 percent, to 1,693.87. The Nasdaq composite declined 2.96 points, or 0.1 percent, to 3,815.02.

Six of 10 industry sectors in the S&P 500 fell. Declines were led by the makers of consumer staples and industrial companies.

Defence companies, which rely on government contracts for a large part of their revenue, led declines for industrial companies. Raytheon fell $1.73, or 2.2 percent, to $76.08. Lockheed Martin dropped $2.42, or 1.9 percent, to $125.

In the UK, the FTSE 100 closed as 6,437.50 – down 22.51 points, or 0.35 per cent.

However, the greater financial problem looms on the horizon. If the political stalemate prevents congress from agreeing that the US is allowed to borrow more money, in order to pay back its desk, then there are concerns that the US could be plunged into recession.