As we enter day 14 of the federal government shutdown the Republicans have moved the goal posts from delaying Obamacare to getting a deal on spending and entitlement cuts. The debt ceiling is expected to be breached in a few days (October 17th) which could cause some serious pain in the financial markets if not outright collapse pending on how long it lasted. Current negotiations to end the shutdown and raise the debt ceiling are reported to be including a discussion on ending sequestration and restoring former spending levels to federal programs.
Senate Republicans are holding the line against Democratic demands for a framework to alleviate the across-the-board spending cuts established by sequestration as part of any deal to end the government shutdown and raise the debt ceiling.
In talks between Senate Majority Leader Harry Reid (D-Nev.) and Senate Minority Leader Mitch McConnell (R-Ky.), the main sticking point is now where to establish funding levels for the federal government and for how long. The Republican offer made on Friday — to set spending at sequestration levels of $988 billion for the next six months -– was rejected by Reid and others on Saturday on the grounds that it was too favorable to the GOP position and discouraged future negotiations.
Meanwhile, in China, calls for a de-Americanized world are being published in the state press in response to the US government playing chicken with the debt ceiling. China is a major holder of US debt and if there is an actual default would be seriously damaged. The calls for building a new world that does not give the US such a prominent position is likely finding a larger international audience given the embarrassing conduct taking place in Congress.
In China, Xinhua, the official government news agency, said that as American politicians continued to flounder over a deal to break the impasse, “it is perhaps a good time for the befuddled world to start considering building a de-Americanised world…
Xinhua attacked America’s pre-eminent position in the world, adding that “such alarming days when the destinies of others are in the hands of a hypocritical nation have to be terminated”.
So House Republicans, in an effort to defund Obamacare, shutdown the federal government and threatened to default on the debt only to later say they’ll take spending cuts instead. OK, talk about further spending cuts but given that Obamacare is now off the table isn’t it past time to re-open the government and stop threatening to default?