MercoPress. South Atlantic News Agency

‘Exasperated’ Obama warns Wall Street that Republicans could force the US to default on its debt

On 17 October, the US government will run out of cash to pay its bills unless the debt ceiling is raised

US President Barack Obama has warned that Wall Street should be concerned that a conservative faction of Republicans is willing to allow the country to default on its debt. The US government has partially closed after Congress failed to agree a budget and will run out of cash on 17 October unless its debt ceiling is raised.

In a TV interview on Wednesday, Mr Obama said he was “exasperated”. He later held talks with Congressional leaders that ended without agreement.

The US government closed non-essential operations on Tuesday after Congress failed to strike a deal on a new budget. Republicans and Democrats are blaming each other for the impasse.

The shutdown has left more than 800,000 employees on unpaid leave and closed national parks, tourist sites, government websites, office buildings, and more.

However, as one budget crisis raged in Washington DC, another one - potentially more dangerous - loomed in the coming weeks. On 17 October, the US government will run out of cash to pay its bills unless the debt ceiling is raised.

On both issues, the Republicans who control the House of Representatives have demanded concessions from Mr Obama and his fellow Democrats in return for funding the government's continued operation and for raising the debt ceiling.

Chiefly, the Republicans demand the repeal, delay or de-funding of a healthcare reform law - dubbed Obamacare - passed by the Democrats in 2010. Major portions of the law which was subsequently validated by the US Supreme Court and was a major issue in the 2012 presidential election took effect on Tuesday.

Earlier in the day Goldman Sachs' boss Lloyd Blankfein warned that a failure to raise the United States borrowing limit would be “extremely adverse”. The warning came after a meeting between US president Barack Obama and 15 heads of big firms.

Business leaders want Washington to understand “the long-term consequences of a shutdown,” said Mr Blankfein. The US government has been shutdown since Tuesday, 1 October.

Other well-known business leaders who attended the meeting included Michael Corbat of Citigroup, Jamie Dimon of JPMorgan Chase & Co, and Brian Moynihan of Bank of America.

By some estimates, the government shutdown is costing the US economy 300m dollars per day. If it continues, it could shave as much as 0.9% from third-quarter GDP growth.

Mr Blankfein and his banking counterparts have expressed concern that there is a possibility the impasse over the US budget could bleed into efforts to raise the so-called debt ceiling, which allows the US government to borrow money to pay back its debts.

The current debt ceiling of 16.7tn has already been breached in 2013, and the US Treasury has been engaging in a series of “extraordinary measures” since the summer to continue paying the nation's bills.

US Treasury Secretary Jack Lew has warned that those measures will be exhausted by 17 October, and then the nation would be forced to default on its debts.