First U.S. shutdown in 17 years unavoidable with no talks

‘Safe Haven’

Treasuries “are a safe haven, for now,” but even bonds “could start to become suspect if we get into mid-October with a possible debt-ceiling crisis,” Valliere said.

Standard & Poor’s 500 Index futures expiring in December fell 0.8% to 1,673.4 at 7:30 a.m. in New York. Dow Jones Industrial Average contracts dropped 117 points, or 0.8%, to 15,078. The yield on 10-year Treasury notes declined to a seven-week low.

“I’m very worried about default, much more than 2011,” the last time the parties battled over taxes and spending, David Plouffe, a former senior adviser to Obama, told Bloomberg Television today.

The White House yesterday released a photo of Obama meeting with his top staff, including Treasury Secretary Jacob J. Lew and budget director Sylvia Mathews Burwell. A cabinet meeting was scheduled for today. While there was no public statement yesterday, Obama plans this week to call on Republicans to pass legislation he’ll sign, according to a senior administration official who asked for anonymity.

Majority Rules

Because Republicans hold a majority of seats in the House, they decide what goes into the bills that are brought up for a vote. A faction that opposes compromise with the Democrats has been pushing its leaders to keep fighting rather than bring a bill to the floor that both parties could agree with.

Without enough Republican support, the only way to pass a bill is with Democrats voting “yes.” That scenario poses a risk for Republican leaders: If their decision angers a large bloc of their membership, the next time the top jobs come up for a vote they could could be pushed out.

Latest Plan

The latest House plan, which passed after midnight yesterday, would authorize 10 weeks of spending starting Oct. 1 only if much of the Obama health law is delayed for a year.

The proposal opened the second round of volleys with the Senate. While House Republicans have moved slightly off their position, from defunding Obamacare to delaying most of its provisions, Democrats haven’t budged in their support for the health law.

Texas Republican Senators John Cornyn and Ted Cruz criticized Senate Majority Leader Harry Reid, a Democrat, for not calling the Senate into session yesterday to consider the latest House proposal.

“There’s no reason the Senate should be home on vacation,” Cruz, who last week spoke on the Senate floor for more than 21 hours to protest the health-care law, said yesterday on NBC’s “Meet the Press.”

The Senate can act quickly to pass legislation, if all 100 members agree. If a single member objects, it would block legislation from being passed for four days or more.

When the Senate amends the proposal, the House speaker, Boehner, will have four main choices -- two of which avert a shutdown. He could pass the Senate bill with mostly Democratic votes or attempt a short-term funding extension to keep the government open past Oct. 1, when fiscal year 2014 begins.

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