Political India: Engaging America

From The Hindu

With less than 12 hours to go before an automatic shutdown of the U.S. federal government occurs, and following a third round of talks with Congressional leaders, President Barack Obama said though Democrats and Republicans were close to hammering out a deal on budget cuts, there were still a few “difficult” outstanding issues.

Reporting on intensive consultations between the White House and the leaders of the House of Representatives and the Senate, Mr. Obama said in their goal to fix the budget deficit level, progress had been made on Thursday and “differences have been narrowed”.

While President Obama argued this week that Democrats were willing to support up to $73 billion in proposed budget cuts, House Speaker John Boehner described some of the Democrats' proposals as “smoke and mirrors”. He implied that Mr. Obama was ducking the issue so far as cuts to mandatory programmes such as Medicare and Medicaid were concerned.

Yet on Thursday evening Mr. Obama warned of the potentially dangerous consequences of a shutdown for the economy, which has barely scraped its way out of the worst downturn witnessed since the 1930s.

Quoting a “top economist,” he said, “The economic damage from a government shutdown would mount very quickly. And the longer it dragged on, the greater the odds of a renewed recession.”

Mr. Obama added that 800,000 federal workers and their families would be impacted by the drying up of paycheques to federal employees and millions of people reliant on government services would not be getting those services.

Yet he also voiced hope that on Friday he may be able to make a statement “that a shutdown has been averted, that a deal has been completed that has very meaningful cuts in a wide variety of categories, that helps us move in the direction of living within our means, but preserves our investments in things like education and innovation, research, that are going to be important for our long-term competitiveness.”

At the heart of the present deadlock is the blockade of Democrats' budget proposals by the Republican-controlled House, an institution whose character has principally been influenced by a vocal section of fiscally conservative Tea Party members since November.