[US] Government Nears Shutdown as Parties Reject Budget Plans
Both parties in Congress dug in deeper hours before a midnight deadline to keep the government open, lobbing dead-end proposals and insults across the Capitol as the first partial shutdown in 17 years looked inevitable.
The Senate voted 54-46 to reject the House's latest plan, in a move that puts the pressure back on House Republicans, who are insisting on tying changes in the 2010 Affordable Care Act to a short-term extension of government funding after tonight.
"With a bully, you can't let them slap you around," said Senate Majority Leader Harry Reid, a Nevada Democrat. "Because if they slap you around today, they'll slap you around five or six times tomorrow."
Senate Republicans floated the idea to extend by one week the funding deadline to avert a shutdown. Reid said no. Democrats urged House Speaker John Boehner to allow a vote on a spending bill without conditions.
"That's not going to happen," Boehner said.
Instead, House Republican leaders are planning another volley today that Reid has already rejected.
The Republican proposal would include a delay of the individual mandate to buy health insurance and end government contributions to coverage for lawmakers and congressional staff.
David Fuller's view Global markets would obviously prefer to see a dynamic US government with bipartisan cooperation. Well, that is certainly not on the agenda and although a shutdown would be temporary, there is the more important hurdle of the US Debt Ceiling on 17th October.
Nevertheless, investors can still rely on a mostly dynamic US corporate management environment. Moreover, American corporations benefit from a strong tailwind provided by the USA's competitive energy prices and a growing lead in technology.
However, October beckons and it has not earned the best of reputations among investors. Combine this with a short-term overbought condition less than two weeks ago, after Mr Bernanke surprised investors by not tapering QE, and we have the ingredients for a temporary market squall. That would create another buying opportunity in stock markets although the choppy environment is likely to continue for the lengthy medium term. After all, investors will be discounting the gradual wind down of QE against the background of somewhat expensive equity valuations, encouraged by low interest rates.