Hardline tactics increase risk of US debt default

ALMOST a week into America's government shutdown, positions seemed only to harden yesterday as the Republican house speaker, John Boehner, refused to rule out the stand-off over the federal budget spilling over into negotiations on the debt ceiling, again raising the spectre of America defaulting on its debt.

"That's the path we are on," Mr Boehner declared as he sought put the blame on President Barack Obama for alleged intransigence on both fronts.

"The nation's credit is at risk because of the administration's refusal to have a conversation," he told ABC News.

He denieed Democrat claims that a draft budget bill without conditions would pass, with support of Democrats and some from his own party.

The impact of the shutdown is being felt most by about 800,000 non-essential federal workers sent home and tourists barred from national parks and monuments.

It was mitigated somewhat by the Pentagon concluding that a bill passed just before the shutdown allowed it to call back 350,000 civilian defence workers on full pay. They will resume work today.

At the heart of the crisis is a demand by the Tea Party wing of Mr Boehner's party that Mr Obama accept not just spending cuts as part of any settlement, but also a scaling back or one-year delay of his signature healthcare reforms.

On the latter at least, the Democrats and the White House are standing firm.

Treasury Secretary Jack Lew said raising the debt and risking a default was "unthinkable." Speaking to Fox News he said that it is "reckless to take that chance, which is why Congress needs to act".

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