The stock market, meanwhile, continued the steady slide that began in mid-September, when Boehner (R-Ohio) embraced a right-wing strategy for using the budget battles to try to dismantle Obama’s signature health-care initiative. The Standard & Poor’s 500-stock index fell 20.67 points to 1,655.45 on Tuesday. The Dow Jones industrial average dropped nearly 160 points to 14,776.53 and has lost nearly 6 percent of its value since hitting a one-year high Sept. 18.
In a hastily planned news conference at the White House, Obama warned that default would be “insane, catastrophic, chaos,” and demanded that Boehner take the weight of that threat off the U.S. economy.
Once that happens, Obama said, “I am happy to talk with him and other Republicans about anything.” But Obama said he also told Boehner in a telephone call Tuesday morning that “having such a conversation, talks, negotiations shouldn’t require hanging the threats of a government shutdown or economic chaos over the heads of the American people.”
An hour later, Boehner fired back that Republicans will not yield until Obama comes to the bargaining table.
“I didn’t come here to shut down the government, and I certainly didn’t come here to default on our debt,” Boehner told reporters at the Capitol. But Obama, he said, is seeking “unconditional surrender by Republicans” before “he’ll sit down and talk. That’s not the way our government works.”
Both men spoke in calm tones, striving to appear reasonable. But with the shutdown in its second week and a critical deadline for government borrowing just eight days away, anxiety was building in Washington and on Wall Street.
Just last month, investors were willing to make short-term loans to the U.S. government virtually for free. On Tuesday, the one-month Treasury bill, which paid 0.13 percent interest on Monday, spiked to 0.27 percent — the highest rate since 2008. Borrowing for slightly longer durations has also become much more expensive in recent days.
“What we’re seeing is a greater concern that the Congress and the White House will not be able to reach an agreement in order to avoid tripping over the debt ceiling,” said John M. Canavan, an analyst with Stone & McCarthy Research.
The national debt hit the $16.7 trillion legal limit in May. Treasury Secretary Jack Lew has since employed a variety of emergency measures to conserve cash. Lew will exhaust those measures on Oct. 17, when he will be forced to rely on a cash balance of about $30 billion and incoming revenue to pay the nation’s bills.
Lew has declined to say when the United States is likely to begin missing payments, the definition of default. But independent analysts say it would happen no later than Nov. 1, when the Treasury Department must pay out nearly $60 billion to Social Security recipients, Medicare providers, civil-service retirees and active-duty military service members.