Battle over Obamacare may trigger US government shutdown

Republican attempts to derail planned healthcare reforms could provoke financial meltdown

Obama accused the Republicans of 'extortion' (Getty Images)

The threat of a shutdown of the United States government, and thereafter a dangerous deadlock on raising the limit on America’s borrowings, known as the debt ceiling, grew ever larger today, as the Republican-controlled House of Representatives passed a budget bill that would strip funding from the planned healthcare overhaul.

With a public approval rating of 11 per cent, the US Congress appeared to be digging an ever deeper hole for itself with risks not just for the country as a whole, but also for the Republican Party, which more than ever is at civil war with itself. Driven by Tea Party right-wingers, the budget bill has no chance of passage in the US Senate.

In purely political terms, the growing crisis offered an opening to Mr Obama to present the Republicans as the poison in the system in Washington. He left the fray yesterday and travelled to a buzzing Ford motor plant in Missouri to make a speech underlining his efforts to boost employment and the standing of the middle class.

The increasingly hardline face of the Republicans will only have been emphasised by a vote in the House on Thursday to cut spending on the food stamps programme, a crucial plank in America’s safety net for the poor, by $30bn over 10 years, a draconian step that would see 3.8 million Americans cut from the rolls next year.

A deal must be agreed on a federal budget by 1 October to avoid a shutdown that would see hundreds of thousands of government workers sent home, and have ripple effects on countless programmes. Yet yesterday the options for reaching a compromise appeared narrow, not least because of Republican attempts to hold the government hostage by crippling the so-called Obamacare reforms, hated by Tea Party conservatives and set to be rolled out on the same date.

The play can only worsen the paralysis because the Senate, which is under the control of Democrats led by Senator Harry Reid, will never countenance gutting Obamacare. “Any bill that defunds Obamacare is dead. Dead. It’s a waste of time,” Mr Reid warned. Nancy Pelosi, the top Democrat in the House, was despairing meanwhile. In 26 years in Congress, “I haven’t seen anything like it. I haven’t seen anything like it,” she told Politico.

Some Republicans also want to throw Obamacare under the bus in the negotiations on the debt ceiling. The US will run out of money to pay its bills in three weeks at the most. Eventually, that would mean not being able to cover its obligations on its international debt. When the US came to the brink of defaulting when the same debate raged in 2011, the world financial system shuddered and the US suffered a downgrade its credit rating from one agency.

That the Speaker John Boehner has capitulated to the demands of his Tea Party wing has been openly lamented by others in the party. Senator John McCain, for instance, has been blunt. “We will not repeal, or de-fund, Obamacare. We will not. And to think we can is not rational,” he told CNN. “Most of the people who are doing this are new and do not have the experience that we had when the American people, who don’t like government but don’t want it to be shut down, reacted in a very negative fashion towards Congress for doing so.”

Mr Obama said on Thursday he was ready to sit down with Republican leaders in Washington next week to seek solutions on both issues. But so far there is nothing to suggest his congressional foes will bend, however calamitous the likely consequences, among them the likelihood that voters will blame them for a shutdown, not Mr Obama. The President has publicly likened the Republican strategy to “extortion”.