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Senate Majority leader Harry Reid has warned that his Democratic-led chamber will reject a House Republican bill to avert a government shutdown.
Early on Sunday, the Republican-led House of Representatives passed its amended version of the Senate bill, removing funding from President Barack Obama’s healthcare law.
There is now less than 48 hours to avert a shutdown, which will begin on Tuesday if no spending bill is passed.
The Senate is not due to meet again until Monday afternoon.
In a statement, Senator Harry Reid said that “after weeks of futile political games from Republicans, we are still at square one”.
Harry Reid added that Republican efforts to change the bill – that would delay the healthcare law for a year and repeal a tax on medical devices – were pointless.
Senate Majority leader Harry Reid has warned that his Democratic-led chamber will reject a House Republican bill to avert a government shutdown
Speaking for the president, White House spokesman Jay Carney said: “Any member of the Republican Party who votes for this bill is voting for a shutdown.”
The president, he said, would also veto the Republican bill.
However, House Republicans went ahead with the changes, ignoring the veto threat and passing the bill in a late-night session by 231 votes to 192.
The Senate is controlled by Barack Obama’s Democratic party, while the Republicans hold the majority in the House of Representatives.
“House and Senate like two locomotives barreling toward one another … in slow motion,” tweeted Republican Representative Scott Rigell.
The looming shutdown ,which would be the first in 17 years, is one of two fiscal crises facing the US government. On October 17, the US treasury department’s authority to borrow money to fund its debt obligations expires unless Congress approves a rise in the so-called debt ceiling.
On Friday, President Barack Obama urged House Republicans to pass the Senate’s stopgap budget bill and to extend the debt limit, and demanded they not threaten to “burn the house down because you haven’t gotten 100% of your way”.
Barack Obama said if the nation were to default on its debt, it would have a “profound destabilizing effect” on the world economy.
“Voting for the treasury to pay its bills is not a concession to me,” Barack Obama said.
“No-one gets to hurt our economy… just because there are a couple of laws [they] don’t like.”
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The US government careens toward a potentially devastating shutdown as Republicans and Democrats in Congress remain deadlocked on a budget to continue its funding.
Agencies have begun making contingency plans ahead of the October 1st deadline to pass a new funding resolution.
The Senate has passed a bill to fund the government through November 15.
But House Republicans have said they refuse to approve the bill absent a provision to strip funding from President Barack Obama’s health law.
The Senate is controlled by Barack Obama’s Democratic party, while the Republicans hold the majority in the House of Representatives.
As a result, lawmakers are at a stalemate as the deadline approaches.
Government agencies have been selecting workers considered essential should funds stop flowing.
The looming shutdown is one of two fiscal crises facing the US government. On October 17, the US treasury department’s authority to borrow money to fund its debt obligations expires unless Congress approves a rise in the so-called debt ceiling.
On Friday afternoon, President Barack Obama urged House Republicans to pass the Senate’s stopgap budget bill and to extend the debt limit, and demanded they not threaten to “burn the house down because you haven’t gotten 100% of your way”.
President Barack Obama urged House Republicans to pass the Senate’s stopgap budget bill and to extend the debt limit
Barack Obama said if the nation were to default on its debt, it would have a “profound destabilizing effect” on the world economy.
“Voting for the treasury to pay its bills is not a concession to me,” he said.
“No-one gets to hurt our economy… just because there are a couple of laws [they] don’t like.”
The president described the healthcare law as “a done deal” and said the Republican-backed repeal effort was “not going to happen”.
Barack Obama said the Senate had “acted responsibly” in passing the budget measure and that now it was up to Republicans in the House of Representatives “to do the same”.
If the government does shut down on October 1st, as many as a third of its 2.1 million employees are expected to stop work – with no guarantee of back pay once the deadlock is resolved.
National parks and the Smithsonian museums in the nation’s capital would close, pension and veterans’ benefit cheques would be delayed, and visa and passport applications would be stymied.
Programmes deemed essential, such as air traffic control and food inspections, would continue.
The defense department has advised employees that uniformed members of the military will continue on “normal duty status”, but “large numbers” of civilian workers will be told to stay home.
Last week, the US House of Representatives a bill that would maintain the US government’s funding levels through November 15 but strip funding from Barack Obama’s health law, known as Obamacare.
On Friday the Senate passed a version of the bill with the defunding provision removed 54-44, largely on party lines.
“The Senate has acted and we’ve done it with bipartisan co-operation. We’ve passed the only bill that can avert a government shutdown Monday night,” Democratic Senate leader Harry Reid said.
“This is it, time is gone.”
The House is now expected to take up that bill at the weekend. Unless the two chambers can come to a consensus and pass a bill for Barack Obama to sign, the federal government will close on October 1st.
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Standard and Poor’s has raised its credit outlook for the US economy from negative to stable.
In August 2011, S&P downgraded the US rating one notch from AAA to AA+, but now believes further downgrades are less likely as the economy continues to recover.
The news saw the US dollar strengthen 1.3% against the Japanese yen, and 0.2% against the euro.
But S&P is still concerned about the high levels of US debt.
The US Treasury Department, which had said that S&P’s calculations in making its initial downgrade were flawed, welcomed the latest action.
“We’re pleased that they are recognizing the progress in the US economy and fiscal results,” said Mary Miller, the Treasury’s under secretary for domestic finance.
Standard and Poor’s has raised its credit outlook for the US economy from negative to stable
The rating agency said in its report the strengths of the US include “its resilient economy, its monetary credibility, and the US dollar’s status as the world’s key reserve currency”, while its weaknesses include “its fiscal performance, its debt burden, and the effectiveness of its fiscal policymaking”.
It noted “tentative improvements”, namely Congress’s avoidance of the “fiscal cliff” at the end of 2012 and the higher-than-expected tax receipts that followed.
But it also said the ability of policymakers to address medium-term fiscal challenges had decreased over the past decade due to a deepening of the partisan divide between Republicans and Democrats in Washington.
“We believe that our current <<AA+>> rating already factors in a lesser ability of US elected officials to react swiftly and effectively to public finance pressures over the longer term in comparison with officials of some more highly rated sovereigns and we expect repeated divisive debates over raising the debt ceiling,” S&P said.
It said the likelihood of it downgrading the US’s rating in the near term was now “less than one in three”.
The move came as the Paris-based Organization for Economic Co-operation and Development (OECD) said that economic growth in the US and Japan was outstripping that of the eurozone.
But most US analysts remained cautious about the upgrade and the equity markets were little changed in New York.
Omer Esiner, chief market analyst at Commonwealth Foreign Exchange in Washington DC, said: “The revised rating is positive news for the dollar but I do not see it being a major catalyst.
“This is just the latest indication that we are seeing a broad stabilization and improvement in the economy and ultimately the government’s fiscal position is improving, albeit slowly.”
Rival rating agencies Moody’s and Fitch have both kept their AAA ratings for the US.
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The US Treasury Department will not mint a trillion-dollar platinum coin to avert another battle over raising the debt ceiling, meaning Congress and the White House have no option but compromise in order to avoid default.
“Neither the Treasury Department nor the Federal Reserve believes that the law can or should be used to facilitate the production of platinum coins for the purpose of avoiding an increase in the debt limit,” Treasury spokesman Anthony Coley told the Washington Post‘s Ezra Klein Saturday.
The U.S. is slated to hit its debt limit next month. If Congress doesn’t act to raise the debt ceiling before then, the nation’s triple A bond rating – which helps contain the cost of borrowing money – will be at risk of a downgrade.
Republicans are generally against raising the debt ceiling without massive spending cuts, while Democrats believe the two issues should be considered separately.
With so much gridlock in Washington recently, lawmakers are not hopeful that they will reach a compromise to raise the debt ceiling in time to meet the deadline and some have been seeking ways to avert the battle altogether.
US Treasury Department will not mint a trillion-dollar platinum coin to avert another battle over raising the debt ceiling
The idea of minting a platinum trillion dollar coin was floated as one way that lawmakers could increase render the debt ceiling obsolete.
The idea for the coin came from a 1997 bill that gave the Treasury the power to mint and issue platinum coins – but the author of that bill had only intended it to apply to smaller coins.
Some economists and lawmakers argued that the bill could apply to a coin of any value, and therefore give the Treasury the power to mint and issue a trillion dollar coin.
The coin could be deposited at the Federal Reserve, giving the Treasury the power to withdraw funds based on the account to meet
government obligations. The coin would not grant any new spending powers to the administration, however, so it would be unlikely to cause inflation.
Economist and Nobel prizewinner Paul Krugman said the time had come to use any economic tools available to the Government.
Paul Krugman was one of those backing the plan for the coin, even though he admits that it is an accounting gimmick.
On the New York Times website, Paul Krugman wrote: “This is all a gimmick – but since the debt ceiling itself is crazy, allowing Congress to tell the President to spend money then tell him that he can’t raise the money he’s supposed to spend, there’s a pretty good case for using whatever gimmicks come to hand.”
But hopes that the debt ceiling fight could be averted by a single coin are now dashed, with the Treasury’s declaration on Saturday.
A US Senate probe has disclosed how lax controls at HSBC, Europe’s largest bank, left it vulnerable to being used to launder dirty money from around the world.
The report into HSBC, released ahead of a Senate hearing on Tuesday, says huge sums of Mexican drug money almost certainly passed through the bank.
Suspicious funds from Syria, the Cayman Islands, Iran and Saudi Arabia also passed through the British bank.
HSBC said it expected to be held accountable for what went wrong.
The damning report comes at a difficult time for the British banking sector, which is having its standards and practices scrutinized by regulators and policymakers.
Critics say the current furor over the manipulation of the Libor inter-bank interest rate is the latest example of a banking system in need of fundamental reform.
US Senate report into HSBC says huge sums of Mexican drug money almost certainly passed through the bank
The report also concludes that the US bank regulator, the Office of the Comptroller of the Currency, failed to properly monitor HSBC.
The report into HSBC was issued by the Senate Permanent Subcommittee on Investigations, a Congressional watchdog that looks at financial improprieties.
The year-long inquiry, which included a review of 1.4 million documents and interviews with 75 HSBC officials and bank regulators, will be the focus of a hearing on Tuesday at which HSBC executives are scheduled to testify.
These will include HSBC’s chief legal officer Stuart Levey, who joined the bank in January and was previously one of the top officials on terrorism and finance at the US Treasury Department.
In a memo released ahead of the hearing, HSBC chief executive Stuart Gulliver said: “It is right that we will be held accountable and that we take responsibility for fixing what went wrong.”
“As well as answering the subcommittee’s questions, we will explain the significant changes we have already made to strengthen our compliance and risk management infrastructure and culture,” he said.
A separate HSBC statement said its executives will offer a formal apology at the hearing.
“We will apologize, acknowledge these mistakes, answer for our actions and give our absolute commitment to fixing what went wrong,” the bank said.
Senator Carl Levin, chairman of the sub-committee, spoke of a “polluted” system that allowed black-market funds to move through the US banking system.
In 2010, Wachovia agreed to pay $160 million as part of a Justice Department probe that examined Mexican transactions.
Last month, ING agreed to pay $619 million to settle US government allegations that it violated US sanctions against Cuba and Iran.
