Shutdown Day 3: No Compromise, No Negotiations From Obama

President Barack Obama laid the blame for the government's partial shutdown at the feet of House Speaker John Boehner, escalating a government-shutdown confrontation that was leading headlong into a potentially more damaging clash over the nation's borrowing authority.

Speaking at a construction company in Washington's Maryland suburbs Thursday, Obama cast Boehner as the captive of a small band of conservative Republicans who want to extract concessions in exchange for passing a short-term spending bill that would restart the partially shuttered government.

"The only thing preventing people from going back to work, and basic research starting back up, and farmers and small-business owners getting their loans — the only thing that is preventing all that from happening right now, today, in the next five minutes, is that Speaker John Boehner won't even let the bill get a yes or no vote because he doesn't want to anger the extremists in his party," Obama said.

The dispute over the shutdown deepened worries about a bigger problem rumbling ever closer — a mid-October deadline for increasing the government's borrowing limit before it runs out of money to pay creditors. The U.S. Treasury warned on Thursday that failure to raise that debt ceiling could spark a new recession even worse than the one Americans are still recovering from.

"The president remains hopeful that common sense will prevail," the White House said in a written statement after an unproductive meeting at the White House about the political standoff that has idled 800,000 federal workers and halted an array of services Americans expect from their government.

Boehner, R-Ohio, complained to reporters that Obama had used the meeting simply to declare anew that he won't negotiate over his healthcare law.

House Republicans, pushed by a core of tea party conservatives, are insisting that Obama accept changes to the healthcare law he pushed through Congress three years ago as part of the price for reopening all of government. Obama refuses to consider any deal linking the healthcare law to routine legislation needed to extend government funding or to raise the nation's debt limit.

"We're probably through negotiating with ourselves," Rep. Jeb Hensarling, R-Texas, chairman of the House Financial Services Committee, said on MSNBC.

Republicans who initially sought to defund the healthcare law in exchange for funding the rest of government have gradually scaled back their demands, but say they need some sort of offer from Obama.

Expressing frustration after the White House meeting, Boehner said: "All we're asking for here is a discussion and fairness for the American people under Obamacare."

The White House said Obama would be happy to talk about healthcare — but only after Congress moves to reopen the government "and stop the harm this shutdown is causing to the economy and families across the country."

If the shutdown dispute persists it could become entangled with the even more consequential battle over the debt limit. The Obama administration has said Congress must renew the government's authority to borrow money by Oct. 17 or risk a first-ever federal default, which many economists say would dangerously jangle the world economy.

Treasury's report Thursday said defaulting on the nation's debts could cause the nation's credit markets to freeze, the value of the dollar to plummet and U.S. interest rates to skyrocket.

The shutdown stalemate is already rattling investors. Stock markets in the U.S. and overseas dropped Wednesday, and Europe's top central banker, Mario Draghi, called the shutdown "a risk if protracted." Leading financial executives met with Obama, and one, Goldman Sachs CEO Lloyd Blankfein, said politicians should not use a potential default "as a cudgel."

Democratic Sen. Claire McCaskill said the House could easily defuse the worsening situation.

"Get us through this six weeks and then let's sit down and figure out how we pay our debts and bring down federal spending," McCaskill, of Missouri, said on MSNBC.

Republicans planned to continue pursuing their latest strategy: muscling bills through the House that would restart some popular programs.

Votes were on tap for restoring funds for veterans and paying members of the National Guard and Reserves. On Wednesday, the chamber voted to finance the national parks and biomedical research, and let the District of Columbia's municipal government spend federally controlled dollars.

Democrats demanded the entire government be reopened, and the White House and Senate Majority Leader Harry Reid, D-Nev., made clear the GOP's narrower bills have no chance of survival. They said the strategy showed that Republicans were buckling under public pressure, with Rep. Louise Slaughter, D-N.Y., saying groups such as veterans were being "used as a pawn in this cynical political game."

Republicans countered that Democrats were being inflexible and were to blame for the continued closure of programs the GOP was trying to reopen. A favorite target was Reid, who has made clear the Senate will be a graveyard for the Republican effort.

"The Senate's refusal to work with the House is at an all-time low," Rep. Trey Radel, R-Fla., said.

Reid told reporters that Obama and Democrats are "locked in tight" on not diluting the health care law.

In an interview afterward, Senate Minority Leader Mitch McConnell, R-Ky., scoffed at the president's stance.

"He can't get his way exactly the way he wants it because he doesn't control the entire government," McConnell said on CNBC's "The Kudlow Report."

Democrats continued lambasting Boehner and freshman Sen. Ted Cruz, R-Texas, the tea party hero who has helped sell fellow conservatives in both chambers on keeping the government shuttered until Obama retreats on his coveted healthcare law.

Rep. Jim Jordan, R-Ohio, and other House conservatives said they met with Cruz and other Senate conservatives Wednesday to update each other on what was happening.

"We think we just have to keep talking about our message, which is real simple: 'Treat people fairly,'" Jordan said.

Republican leaders and many rank-and-file GOP lawmakers, especially in the Senate, had been reluctant to link demands for curbing the healthcare law to legislation keeping government open, concerned that voters would blame Republicans for any shutdown.

But Wednesday, Republicans solidly opposed an unsuccessful Democratic move to force the House to vote on a Senate-passed bill keeping government open until Nov. 15 without any strings on the healthcare law.

"Now that we've jumped off the cliff, lit ourselves on fire, we've entered the valley of death," said Rep. Devin Nunes, R-Calif., who has criticized the conservatives' strategy. "So now we've got to keep running and we have to hold together."

The House has approved legislation keeping the entire government funded through Dec. 15. It also would impose a one-year delay in the healthcare law's requirement that individuals buy health insurance, which would threaten to cripple the program, and block federal subsidies for health coverage bought by lawmakers and their staff.

As the politicians battled, mail continued to be delivered, air traffic controllers remained at work, and payments were being made to recipients of Social Security, Medicare, Medicaid, and unemployment benefits.

Taxes were still due, but lines at IRS call centers went unanswered.

Most routine food inspections by the Food and Drug Administration were halted, and some loan approvals for many low- and middle-income borrowers were thrust into low gear by the Department of Housing and Urban Development. National parks were closed.

Workers were furloughed based on how essential their jobs were to the nation: Only 3 percent of NASA employees were kept on, while 86 percent of employees at the Homeland Security Department were working.