Obama said investors should take more seriously the threat of a potential default, which global markets have brushed off for months as Washington’s usual partisan theatrics.
“This time, I think Wall Street should be concerned,” Obama said on CNBC. “When you have a situation in which a faction is willing to default on U.S. obligations, then we are in trouble.”
On Capitol Hill, senior Republicans began to suggest that a broad agreement to overhaul entitlements and the tax code could be used as a resolution to both the shutdown and debt limit clash. But Democrats view that approach as hostage taking, and say Congress must reopen the government and authorize additional borrowing before serious negotiations can occur.
At the White House, Obama joined the Republican and Democratic leaders of Congress in a one-and-a-half-hour meeting that Mitch McConnell (R-Ky.), the Senate minority leader, called “cordial but unproductive.”
Leaders of both parties said afterwards that Republican demands to defund or delay Obama’s signature health law, which helped lead to this week’s shutdown, remain a critical obstacle to any agreement.
House Speaker John A. Boehner (R-Ohio) said the president “reiterated tonight he will not negotiate.”
“We’ve got divided government. Democrats control the Senate, Republicans control the House,” he said. “All we’re asking for here is a discussion and fairness for the American people under Obamacare.”
But Senate Majority Harry Reid (D-Nev.) said the president was unbending, calling him “strong, strong, strong.”
He added, “One thing we made very clear in that meeting: We are locked in tight on Obamacare.”
The back-and-forth Wednesday came on the second day of a partial government shutdown that has furloughed 800,000 federal workers and appears likely to remain for an extended period of time.
The next crucial deadline comes on Oct. 17, the last day that the Treasury Department estimates that the federal government is certain to have enough money to pay all its bills. Investors have been demanding higher interest rates for U.S. Treasury bills in recent days, a sign of concern that the federal government could have trouble servicing its debt.
On Wednesday, there was growing realization on both sides of the aisle that lawmakers will likely have to deal with resolving the debt ceiling issue at the same time as the government shutdown. Some senior Republicans said they are ready to enter a more far-reaching discussion over entitlement programs, tax reform and the federal debt limit.