Shutdown, Day 16: Can Nation Avert Default?

Source: Catalina Camia / USA Today

The nation is now one day away from a potentially disastrous default as the partial government shutdown begins Day 16. Financial markets are in wait-and-see mode as all eyes turn to the Senate.

The burden to find a compromise now lies in the Senate, where Majority Leader Harry Reid and Minority Leader Mitch McConnell resumed control of negotiations after a frantic day in the House of Representatives. A plan by House Republicans to reopen the government and raise the nation’s debt ceiling to avert default was scuttled after it became clear that Speaker John Boehner didn’t have the votes to pass the measure. Some House conservatives are hoping to rein in the Affordable Care Act, but President Obama has resisted repeated efforts to undercut the health care law.

Fitch Ratings, the third-largest of the major debt-rating companies, warned it could possibly downgrade the nation’s AAA bond rating because of the political wrangling in Washington. The Treasury Department has said the emergency measures it has been using to manage the nation’s finances under the existing debt limit will run out Thursday. If the debt limit is not raised, the U.S. won’t be able to borrow any more money. Fitch said it could make its decision on the rating by the end of the first quarter.

A new Pew Research Center poll says 51% of Americans believe raising the debt limit by Thursday is “absolutely essential to avoid economic crisis.” By comparison, more than one-third,or 36% say the nation can go past the deadline without any “major economic problems, ” the Pew survey found. That figure includes 52% of Republicans and 38% of independents who are OK with going past the deadline. White House press secretary Jay Carney has called lawmakers who are ignoring warnings about financial calamity “debt limit and default deniers.”

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