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Obama 'exasperated' as shutdown talks fail

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US President Barack Obama said he was "exasperated" after a Wednesday meeting with Republican leaders saw no deal on a government shutdown amid warnings that the military and federal reserve were increasingly concerned by the effects of the impasse.

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There was no sign on Wednesday of a breakthrough to end a US government shutdown that has reduced many services as rival Republican and Democratic lawmakers continued to quarrel over President Barack Obama’s health care reform law,  accusing each other of refusing to negotiate.

A meeting between Obama and top Republican congressmen, who control the lower House of Representatives, led nowhere, with hundreds of thousands of federal employees remaining out of work with no pay.

“Am I exasperated? Absolutely I’m exasperated. Because this is entirely unnecessary,” Obama told the cable news network CNBC before the meeting. “I am exasperated with the idea that unless I say to 20 million people, ‘You can’t have health insurance,’ these folks will not reopen the government. That is irresponsible.”

Republicans have tied a budget bill authorising the federal government to re-open fully to a provision that would delay the controversial health care overhaul by one full year. Democrats have repeatedly said they will not backtrack on Obama’s signature 2010 reform.

“The president reiterated one more time that he will not negotiate,” Republican House Speaker John Boehner told reporters after the talks in the White House.

The uncertainty in Washington has forced Obama to scale back a trip to Asia that was designed to reinforce US commitment and business interests in the  fast-developng region.

Though some moderate Republicans have begun to question their party’s strategy, Boehner so far has kept them united behind a plan to offer a series of small bills that re-fund select parts of the government, like National Institutes of Health, which conducts medical research.

Those measures are likely to be defeated in the Democratic-controlled Senate, and Obama said he would veto them if they reached his desk.

Consequences

Though the shutdown would do relatively little damage to the US economy in the short term, global markets could begin feeling the shockwaves  if Congress also fails to raise the debt limit before borrowing authority runs out in coming weeks.

A short shutdown would slow US economic growth by about 0.2 percentage points, investors Goldman Sachs noted on Wednesday, but weeks of political gridlock could weigh more heavily - 0.4 percentage points - as furloughed federal workers scale back personal spending.

The US Army’s top general said on Wednesday that the shutdown was significantly harming day-to-day operations, and intelligence leaders say it is undermining their ability to monitor threats.

A Federal Reserve official said it could delay the central bank’s ability to assess whether its monetary stimulus efforts are still needed. The last shutdown in 1995 and 1996 cost taxpayers $1.4 billion, according to congressional researchers.

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