GOP Madness 
 
 They’re threatening an economic shutdown that will cause financial hardship and even ruin for millions of Americans. So let’s call these House Republicans what they are, says Jon Favreau. 
 
 The most terrifying speech I ever wrote for President Obama was one he never gave. On July 30, 2011, I began drafting an address to the nation about what would happen if Congress refused to raise the debt limit within 48 hours, thus denying the United States Treasury the ability to pay our country’s bills for the first time in 235 years. 
 
 Suddenly, all of the administration’s warnings from the prior few weeks became real. Without enough cash on hand, the government would be forced to delay indefinitely Social Security checks, the ones our grandparents depend on to put food in their mouths and a roof over their heads. Veterans who served this country would stop receiving the benefits they earned, and the men and women in uniform risking their lives for us wouldn’t get paychecks. 
 
 Every company in America that does business with the federal government, of which there are hundreds of thousands, would not see their contracts paid on schedule, an effect that would ripple down to their employees and their families. With each passing day, making our debt payments to businesses and governments around the world would become more and more difficult. When the world stopped seeing the United States as a safe and reliable place to invest, the cost of borrowing money would skyrocket for every single American—whether it’s a home mortgage or a personal credit card. And those high borrowing costs, coupled with billions in delayed income for seniors, soldiers, small-business owners, and their employees, almost surely would send our economy and the world’s into a crisis even deeper and more dramatic than the Great Recession of 2009. 
 
 Fortunately, the draft speech never left my computer screen. The next day, at the last possible moment, the House of Representatives voted to provide the Treasury with the ability to pay our bills. But their decision to negotiate at the brink, under a dark cloud of uncertainty, still led to real economic damage: the stock market had the worst single day since the 2008 financial crisis, plunging 635 points. Billions in higher borrowing costs were added to the national debt. Economic growth slowed. Job growth slowed. And for the very first time, the United States lost its triple-A credit rating. 
 
 The obvious lesson from this entirely self-inflicted fiasco is never, ever to treat America’s bill-paying authority as a bargaining chip in political negotiations. The president has learned this lesson. House Republicans have not. And so, incredibly—insanely—we find ourselves a few weeks away from the same self-inflicted fiasco just two years later. 
 
 Why? 
 
 Part of the reason, I think, has to do with the dull and confusing language we use to talk about this issue. Who the hell knows what raising the debt limit really means, anyway? While not in any way true, a higher debt ceiling sounds like a green light to pile up more debt. It suggests the authority to engage in more spending and borrowing. So when a pollster asks people whether raising the debt limit should accompany a negotiation over more spending cuts, of course they’ll say yes! If the pollster adds “even if it risks default,” many people will still say yes, because what the hell does “default” mean? It may sound vaguely threatening, but certainly not as frightening as the scenario I described in the draft 2011 speech. 
 
 Contrast all that confusion with the phrase “government shutdown.” People generally know what a government shutdown looks like. We have historical context, as it’s happened before. We can visualize closed buildings and offices; services halted and benefits withheld. And by a healthy majority, the American people do not support the House Republicans’ latest attempt to put us through a government shutdown just so they can deny affordable health insurance to the sick and poor for one more year. 
 
 Well, a failure to raise the debt limit would inflict far more pain on far more people than a government shutdown. Breaching the debt limit would trigger an economic shutdown of epic proportions. The president used that phrase, “economic shutdown,” in a speech last week. He should keep using it. The White House should say it every day, as should everyone who wants to avoid such a calamity. Because it happens to be true. 
 
 A vote to raise the debt limit will not cost taxpayers a single dime. A vote to raise the debt limit will not grow our deficit by a single dime. A vote to raise the debt limit will not give the president or Congress the ability to spend any new money whatsoever. These are incontrovertible facts. A failure to raise the debt limit, however, will lead to an economic shutdown that will cause financial hardship and even ruin for millions of Americans. This, too, is an incontrovertible fact. 
 
 Republicans are still whining about Dan Pfeiffer’s analogy that compared their list of debt-ceiling demands to someone negotiating with a bomb strapped to their chest. Perhaps they prefer Mitch McConnell’s 2011 declaration that the global economy is a “hostage that’s worth ransoming.” Either way, the Republicans should help us more aptly describe a situation where they demand we accept their ideological agenda in exchange for not wreaking havoc on our lives. 
 
 “The president must negotiate!” Really? Because in most negotiations, both sides stand to gain something. In this negotiation, the House Republicans get to pass policies on which Mitt Romney ran and lost, while the president gets to live in a country that isn’t suffering from yet another economic calamity, a country that isn’t seen as the world’s superpower turned deadbeat nation. How wonderful for him. What a shining example of bipartisan cooperation to be celebrated by the Washington media. 
 
 What a joke. 
 
 From budgets and taxes to Syria and Iran, this president has shown that he will negotiate on almost any issue, with anyone, at any time. But he will not—he cannot—negotiate with a roving band of anarchists who say, “Build our oil pipeline or the troops don’t get paid. Give us tax cuts for the rich or seniors don’t get their Social Security checks. Let insurance companies do as they please or the economy gets it.” ||||| “After a discussion about potential paths forward, no specific determination was made,” the White House said in a statement to reporters. “The President looks forward to making continued progress with members on both sides of the aisle.” 
 
 Obama’s meeting with about 20 House Republicans, including Speaker John Boehner (Ohio), lasted about 90 minutes. Obama was accompanied by Vice President Biden, Treasury Secretary Jack Lew, White House chief of staff Denis McDonough and deputy chief of staff Rob Nabors. The White House statement said the administration officials “listened to the Republicans present their proposal,” adding that Obama’s goal remains to both raise the debt ceiling and reopen the government. 
 
 House Republican leaders initially offered a six-week increase in the federal debt ceiling in exchange for negotiations with President Obama on longer-term “pressing problems,” but they stopped short of agreeing to end a government shutdown now in its 10th day. 
 
 Later in the day, Senate Republicans put forward a plan that would reopen the government and raise the federal debt limit for as long as three months. 
 
 Returning to the Capitol after meeting with Obama at the White House, members of a 20-strong House Republican delegation described the session as a good first step. 
 
 The White House denied a news report that Obama had rejected the House GOP’s proposal outright, saying that “no specific determination was made” after Obama, Vice President Biden and top officials listened to the presentation. 
 
 House Majority Leader Eric Cantor (R-Va.) said the gathering was “a very useful meeting” and indicated that conversations would continue into the evening. 
 
 “It was clarifying, I think, for both sides as to where we are,” he said. 
 
 “We put an offer on the table,” Rep. Paul Ryan (R-Wis.), chairman of the House Budget Committee, told reporters. Obama “didn’t say yes; he didn’t say no,” Ryan said. “We’re continuing to negotiate this evening.” 
 
 Earlier, in a news briefing following a closed-door meeting of House Republicans to present a plan to raise the debt limit temporarily, House Speaker John A. Boehner (R-Ohio) said, “What we want to do is offer the president today the ability to move a temporary increase in the debt ceiling.” He described the offer as a “good-faith effort on our part to move halfway to what he’s demanded in order to have these conversations begin.” 
 
 Obama is “happy” that House Republicans agree a federal debt default is not an option, but he would prefer a longer extension of the debt limit, White House spokesman Jay Carney said after the plan was disclosed. 
 
 Boehner did not immediately tell reporters specifics of the plan. But the speaker made clear that House Republicans were not agreeing to Obama’s demand that they pass legislation to fund the government without partisan riders, thereby ending the first government shutdown in 17 years. 
 
 [See the latest updates on the shutdown.] 
 
 In any case, Boehner’s proposal fell flat in the Senate, where members of both parties were clamoring to end the shutdown. 
 
 Senate Majority Leader Harry M. Reid (D-Nev.), speaking to reporters after a White House meeting between Obama and Senate Democrats, said the shutdown must end and the debt ceiling must be raised ahead of negotiations with the Republicans, who he complained keep changing their demands. 
 
 “This is a situation where they do not know what they want,” Reid said. His message to the GOP: “Open the government. Pay our bills. We’ll negotiate with you about anything.” Reid also said that Senate Democrats would “look at anything [House Republicans] send us,” but when asked about negotiating with them before reopening the government, he replied: “Not going to happen.” 
 
 Senate Minority Leader Mitch McConnell (R-Ky.), meanwhile, was consulting fellow Republican senators to develop a proposal, advanced by Sen. Susan Collins (R-Maine), to end the shutdown and raise the federal debt limit for as long as three months. 
 
 The package sparked the first bipartisan negotiations since the standoff began in early September. But Collins’s proposal called for Democratic concessions including repeal of a tax on medical devices needed to fund Obama’s health-care initiative, and it would maintain deep budget cuts known sequestration through at least March. 
 
 The House GOP plan would suspend the debt limit until Nov. 22, the Friday before Thanksgiving, while also forbidding Treasury Secretary Jack Lew from using “extraordinary measures” that his department has used in recent years to extend his borrowing authority for weeks after the ceiling is reached, according to a senior GOP aide who was in the room. This creates a hard “X date,” as financial analysts call the issue, leaving no wiggle room beyond that day. 
 
 The House Republicans essentially are offering a “clean” debt-limit increase in exchange for negotiations over reopening the government, aides said. The government shutdown would not end until Obama agreed to “structural reforms” to the tax code and federal health programs. 
 
 The Republican plan for a six-week increase in the debt limit, without conservative strings attached, was aimed chiefly at calming jittery financial markets, according to senior GOP advisers. 
 
 Financial markets soared earlier Thursday on the first sign of optimistic news out of Washington in almost a month, with the Dow Jones industrial average up 169 points in the first 15 minutes of trading. The rally continued when Boehner confirmed the plan at an 11 a.m. press briefing, and by 1:30 p.m. the Dow was up more than 225 points. 
 
 The plan was presented to the House GOP caucus Thursday morning after Lew warned lawmakers that he would be unable to guarantee payments to any group — whether Social Security recipients or U.S. bondholders — unless Congress raises the federal debt ceiling. 
 
 If the GOP plan goes over well with rank-and-file Republicans, Boehner could put the legislation on the floor for a vote late Thursday, aides said. 
 
 House Majority Leader Eric Cantor (R-Va.) described the plan at the news briefing as “a temporary extension of the debt ceiling in exchange for a real commitment by the president and the Senate majority leader to sit down and talk about the pressing problems” facing the country. Rep. Kevin McCarty (R-Calif.), the House majority whip, characterized these problems as “drivers” of increasing federal debt. 
 
 Obama has indicated he could support a short-term debt-limit hike, but he has also demanded that Republicans allow the government to reopen before he would negotiate with the GOP. 
 
 If the Republicans want to negotiate, they should “reopen the government, extend the debt ceiling,” Obama said last week. “If they can’t do it for a long time, do it for the period of time in which these negotiations are taking place.” 
 
 Carney, the White House spokesman, told reporters Thursday afternoon: “The president is happy that cooler heads at least seem to be prevailing in the House, that there at least seems to be a recognition that default is not an option.” However, Obama “believes it would be far better . . . to raise the debt ceiling for an extended period of time,” as Senate Democrats are proposing. 
 
 “It would be far better for the economy if we stopped this episodic brinksmanship and . . . mothballed the nuclear weapon here, which is the threat of default, for a longer duration,” Carney said. “But it is certainly at least an encouraging sign that . . . they are not listening to the debt-limit and default deniers.” If Republicans now recognize that default cannot be permitted, he added, “why keep the nuclear weapon in your back pocket?” 
 
 [Members of Congress are collecting pay during the shutdown.] 
 
 The first reactions from Republican House members appeared generally positive. But several insisted they would back the measure only with a commitment from the president to open negotiations over the next debt-ceiling hike. 
 
 “All we’re doing is saying, if the president hasn’t come towards us, we’ll just move the deadline out and offer it again,” said Rep. John Fleming (R-La.). “We haven’t changed our position. We’ve just changed the timeline.” 
 
 Fleming rejected the idea that the proposal represents a concession from Republicans. “Not really, if we get a concession from the president, to sit down and negotiate. If he doesn’t agree to that, I won’t agree to the debt ceiling.” 
 
 Meanwhile, several of the House’s most conservative members withheld comment about the proposal. “I’m not very enthusiastic,” Rep. Steve King (R-Iowa) said without elaborating. 
 
 Rep. Steve Scalise (R-La.), chairman of the Republican Study Committee, was noncommittal when asked about the plan and said his support depends on what happens in the meeting with the president Thursday. 
 
 “Some of this involves a conversation with the president,” Scalise said. “There’s nothing unilateral that can be done. It’s going to involve having the president finally put some things on the table of his own.” 
 
 Heritage Action for America, a conservative advocacy group influential with tea party Republicans, said Thursday that while it remains committed to fighting Obama’s health-care law and opposes “clean debt ceiling increases,” it wants to give House GOP leaders “the flexibility they need to refocus the debate on Obamacare.” Therefore, the group said, it will not include votes in favor of the proposal in its rankings of lawmakers’ conservatism. 
 
 The plan would meet Obama’s demand for an increase in Treasury’s borrowing authority without any legislative attachments. But it would set the stage for tough negotiations, possibly lasting until Thanksgiving, over bigger fiscal matters, since the tentative plan calls for only a six-week increase of the debt limit. 
 
 Advisers cautioned that Boehner’s often unruly caucus, which has repeatedly rejected leadership initiatives in the past, needs to sign off on the plan before it can advance. 
 
 Reacting to the GOP proposal, a White House official said: “It is better for economic certainty for Congress to take the threat of default off the table for as long as possible, which is why we support the Senate Democrats’ efforts to raise the debt limit for a year with no extraneous political strings attached.” 
 
 Obama also wants House Republicans to allow a vote on the “clean” government funding bill that has been passed by the Senate, the official said. “Once Republicans in Congress act to remove the threat of default and end this harmful government shutdown, the president will be willing to negotiate on a broader budget agreement,” the official added. “While we are willing to look at any proposal Congress puts forward to end these manufactured crises, we will not allow a faction of the Republicans in the House to hold the economy hostage to its extraneous and extreme political demands. Congress needs to pass a clean debt-limit increase and a funding bill to reopen the government.” 
 
 Financial experts much prefer a longer-term extension of the debt ceiling, but even a brief extension would ease some of the turmoil that has been brewing on Wall Street. By the time markets closed Monday afternoon, the Dow had dropped 900 points in 14 trading days, losing almost 6 percent of its value. 
 
 Just three weeks ago, Boehner’s leadership team presented a plan to lift the debt ceiling accompanied by a one-year delay of Obama’s health-care law and a litany of other conservative domestic policy demands. 
 
 With Washington in gridlock and a key deadline in the debt-limit debate just one week away, Lew told the Senate Finance Committee Thursday morning that he would do all he can to minimize the pain of breaching the $16.7 trillion debt limit. But Lew also told the senators that in an unprecedented situation in which he would be relying entirely on the erratic flow of incoming revenue, the economy would suffer and there would not even be certainty that the government could make all interest and principal payments. 
 
 “No credible economist or business leader thinks that defaulting is good for job creation or economic growth,” Lew said. “If Congress fails to meet its responsibility, it could be deeply damaging to the financial markets, the ongoing economic recovery, and the jobs and savings of millions of Americans.” 
 
 Rep. Jim Jordan (R-Ohio), a key conservative with ties to leadership and more junior tea party-backed colleagues, said Thursday morning that he and his colleagues “potentially” could support the new GOP debt-ceiling plan. 
 
 “We think there needs to be some movement in dealing with the overall problem,” he said. “It’d be nice to get some dollar-to-dollar cuts there.” 
 
 Asked whether he could support a short-term increase without related cuts, Jordan said he expected that question would be the primary topic of conversation among House Republicans on Thursday. 
 
 Amid growing anxiety about a debt default, Republicans in the House and the Senate floated ideas Wednesday for raising the debt limit — if only for a short time — in hopes of forcing Obama to the negotiating table. 
 
 One of the most significant ideas was brewing in the House, Ryan briefed conservatives on a plan to raise the debt limit for six weeks, which would give party leaders time to negotiate a broad agreement to overhaul the tax code and trim federal health-care and retirement spending. 
 
 The plan, which Ryan sketched in a Wall Street Journal opinion piece Wednesday, was short on details. And it called for spending cuts of roughly $200 billion to cover the cost of raising the debt limit even in the near term — although senior GOP advisers said late Wednesday that they were also considering an increase with no strings attached. 
 
 Lew’s appearance is the first public confrontation between a senior administration official and Republicans since the fiscal showdown began last month. The meeting comes as some lawmakers on Capitol Hill are questioning whether the administration has been too alarmist about the threat of going past an Oct. 17 deadline to raise the debt ceiling. Republicans have cited reports by credit-rating firms saying that the United States would not technically default unless it fails to make interest payments on its debt — which they regard as unlikely. 
 
 Echoing points made by Republican presidents and officials in prior administrations, Lew is tried to counter that argument by highlighting the broad risks of leaving the government with no borrowing authority. 
 
 “Certain members of the House and Senate believe that it is possible to protect our economy by simply paying only the interest on our debts, while stopping or delaying payments on a number of our other legal commitments,” Lew said. “The United States should not be put in a position of making such perilous choices for our economy and our citizens. There is no way of knowing the irrevocable damage such an approach would have on our economy and financial markets.” 
 
 For example, officials say, Lew pointed out that the Treasury routinely refinances about $100 billion in debt every week, paying back principal and taking on new debt. He noted that should investors back away from Treasury debt, it could make refinancing difficult and throw the country’s financial markets into even greater chaos. 
 
 Lew said the administration will face a series of difficult decisions even if Treasury can avoid what the credit-rating firms consider a default. In a scenario where federal spending will far exceed revenue, he said, the administration would have only imperfect options in deciding whom to pay. Officials say Lew will try to push Republicans to decide whom they wouldn’t pay — Social Security recipients or veterans. 
 
 “We are relying on investors from all over the world to continue to hold U.S. bonds . . .,” Lew said. “If U.S. bondholders decided that they wanted to be repaid rather than continuing to roll-over their Treasury investments, we could unexpectedly dissipate our entire cash balance.” 
 
 A Treasury official said Wednesday night that Obama would have to make the final decision in such a scenario. 
 
 Lew confronted a Senate Finance Committee stocked with Republicans who have been skeptical about the administration’s claims that breaching the debt limit would be catastrophic. 
 
 Among the committee’s members is Sen. Patrick J. Toomey (R-Pa.), who has championed the notion that the Treasury Department could avoid chaos in financial markets by continuing to make interest payments to investors. 
 
 The senior Republican on the panel, Sen. Orrin G. Hatch (Utah), has also expressed doubts about the risk of a debt-ceiling breach. But on Wednesday, Hatch acknowledged that blowing the Oct. 17 deadline would “scare the hell out of people.” And while Treasury might be able to pay interest on the debt, Hatch said, “the real question is whether it’s going to tank the stock market.” 
 
 Obama, when he meets Thursday with House GOP leaders, is planning to emphasize his refusal to “pay ransom” to avoid default and reopen the government. Ryan, nonetheless, held out hope that the “meeting at the White House will allow us to work together and find common ground.” 
 
 Thursday’s meeting is the second in a series the White House announced Wednesday aimed at breaking the impasse, reopening the government and raising the $16.7 trillion debt limit. Obama met first with House Democrats late Wednesday and plans to meet with each party in the Senate in the coming days, starting with a meeting with the Senate Democratic caucus Thursday. 
 
 Obama invited the entire 233-member GOP House conference to join him at the White House, but Republicans decided to send only an 18-member group comprising top leaders and key committee chairmen, including Ryan, Appropriations Chairman Harold Rogers (Ky.) and Ways and Means Chairman Dave Camp (Mich.). 
 
 “Nine days into a government shutdown and a week away from breaching the debt ceiling, a meeting is only worthwhile if it is focused on finding a solution,” Brendan Buck, a spokesman for Boehner, said in a statement. “That’s why the House Republican Conference will instead be represented by a smaller group of negotiators.” 
 
 The White House said Obama is “disappointed” by Boehner’s decision to limit Republican attendance and emphasized that Obama will not be negotiating. 
 
 “The president thought it was important to talk directly with the members who forced this economic crisis on the country about how the shutdown and a failure to pay the country’s bills could devastate the economy,” White House press secretary Jay Carney said in a statement. 
 
 Obama “will talk to anyone anytime . . . but will not pay the Republicans ransom for doing their job,” Carney said. “If the Republicans want to have a real discussion, they should open the government and take the threat of default off the table.” 
 
 Republicans on Capitol Hill, meanwhile, circulated a memo from one of the nation’s leading credit-rating agencies that seemed to play down the threat of default. In the memo, Moody’s Investors Service said the Treasury Department is likely to continue paying interest on the government’s debt even if Congress refuses to lift the limit on borrowing, preserving the nation’s sterling AAA credit rating. 
 
 “We believe the government would continue to pay interest and principal on its debt even in the event that the debt limit is not raised, leaving its creditworthiness intact,” said the Oct. 7 memo. “The debt limit restricts government expenditures to the amount of its incoming revenues; it does not prohibit the government from servicing its debt. There is no direct connection between the debt limit (actually the exhaustion of the Treasury’s extraordinary measures to raise funds) and a default.” 
 
 The memo offered a starkly different view of the consequences of breaching the debt limit than is held by the White House, many policymakers and other financial analysts. Over the weekend, economists at Goldman Sachs said the economy would take a devastating hit even if Treasury kept making payments on the debt, because the pullback in federal spending would amount to roughly $175 billion, or 4.2 percentage points of gross domestic product. 
 
 Mohamed El-Erian, the chief executive of PIMCO, the world’s largest bond company, agreed that the administration could take steps to contain the worst damage. But, he said, there would still be severe consequences. 
 
 “It would avoid a series of major and cascading disruptions to the functioning of a financial market that is at the heart of the core of the global financial system,” he said. “Having said that, equities and other risk assets would still likely sell off hard.” 
 
 Rep. Chris Van Hollen (D-Md.) noted that Moody’s analysis is geared toward the well-being of its own investors, not average Americans. “When they say their clients will be okay, they’re not talking about people on Society Security, Medicare or our troops in the field. Moody’s doesn’t give a damn about any of those people.” 
 
 William Branigin, Rosalind S. Helderman and Scott Wilson contributed to this report. ||||| What they’re saying about the shutdown: Certain phrases repeatedly came up during speeches on the House floor on Tuesday. (Sarah Parnass/The Washington Post) 
 
 What they’re saying about the shutdown: Certain phrases repeatedly came up during speeches on the House floor on Tuesday. (Sarah Parnass/The Washington Post) 
 
 The fight over the government shutdown quickly moved on Wednesday to a bigger showdown over raising the nation’s debt ceiling, as the first White House talks to solve the fiscal standoff failed to make any progress toward a deal. 
 
 President Obama and business leaders warned that the clash has raised the chances of a historic default on the national debt, which would occur if Congress doesn’t agree to raise the $16.7 trillion debt ceiling later this month and could cause a new recession. 
 
 Obama said investors should take more seriously the threat of a potential default, which global markets have brushed off for months as Washington’s usual partisan theatrics. 
 
 “This time, I think Wall Street should be concerned,” Obama said on CNBC. “When you have a situation in which a faction is willing to default on U.S. obligations, then we are in trouble.” 
 
 On Capitol Hill, senior Republicans began to suggest that a broad agreement to overhaul entitlements and the tax code could be used as a resolution to both the shutdown and debt limit clash. But Democrats view that approach as hostage taking, and say Congress must reopen the government and authorize additional borrowing before serious negotiations can occur. 
 
 View Graphic House shutdown vote tracker: See which Republicans say they will vote for a “clean” spending bill to end the shutdown. 
 
 At the White House, Obama joined the Republican and Democratic leaders of Congress in a one-and-a-half-hour meeting that Mitch McConnell (R-Ky.), the Senate minority leader, called “cordial but unproductive.” 
 
 Leaders of both parties said afterwards that Republican demands to defund or delay Obama’s signature health law, which helped lead to this week’s shutdown, remain a critical obstacle to any agreement. 
 
 House Speaker John A. Boehner (R-Ohio) said the president “reiterated tonight he will not negotiate.” 
 
 “We’ve got divided government. Democrats control the Senate, Republicans control the House,” he said. “All we’re asking for here is a discussion and fairness for the American people under Obamacare.” 
 
 But Senate Majority Harry Reid (D-Nev.) said the president was unbending, calling him “strong, strong, strong.” 
 
 He added, “One thing we made very clear in that meeting: We are locked in tight on Obamacare.” 
 
 The back-and-forth Wednesday came on the second day of a partial government shutdown that has furloughed 800,000 federal workers and appears likely to remain for an extended period of time. 
 
 The next crucial deadline comes on Oct. 17, the last day that the Treasury Department estimates that the federal government is certain to have enough money to pay all its bills. Investors have been demanding higher interest rates for U.S. Treasury bills in recent days, a sign of concern that the federal government could have trouble servicing its debt. 
 
 On Wednesday, there was growing realization on both sides of the aisle that lawmakers will likely have to deal with resolving the debt ceiling issue at the same time as the government shutdown. Some senior Republicans said they are ready to enter a more far-reaching discussion over entitlement programs, tax reform and the federal debt limit. 
 
 “I think we’re at a point where we need a broader solution here to not only the [temporary funding measure] but also the debt limit,” said Rep. Dave Camp (R-Mich.), chairman of the House Ways and Means Committee. “It’s right around the corner. I think they’re both going to have to get addressed.” 
 
 House Majority Whip Kevin McCarthy (R-Calif.) agreed. “The president should start negotiating,” he said. “I’d like to just get one agreement” to reopen the government and raise the debt limit “and be done with it.” 
 
 Obama and Senate Democrats have so far refused to negotiate over either issue, saying they have already agreed to locking in lower funding levels favored by the GOP and that paying the nation’s bills — which raising the debt ceiling would do -- is non-negotiable. Broader budget issues can be discussed after the government reopens and the debt limit is lifted, they said. 
 
 “Once we reopen government, I propose a House-Senate joint conference to work out the nation’s long-term fiscal challenges,” Reid said. “Both sides have priorities, but we want to move forward.” 
 
 The clash is starting to raise concerns in markets that the two sides will not find agreement before Oct. 17. Investors are already demanding much higher returns on U.S. Treasury bills that are paid back after that date, reflecting a higher risk assessment. 
 
 In daily market-monitoring discussions with Wall Street firms on Wednesday, Treasury officials said there were new fears among investors that a deal might not be reached until the final hours — which would cause intense market volatility. 
 
 A U.S. default, which has never happened before, would lead to a dramatic cut in federal spending and delays in Social Security checks and could undermine the traditional U.S. role as a financial safe-haven. 
 
 “There’s precedent for a government shutdown; there is no precedent for default,” Goldman Sachs chief executive Lloyd Blankfein said Wednesday after he and several other business leaders met with Obama at the White House. “We’re the most important economy in the world. We’re the reserve currency of the world.” 
 
 Both sides harbor hopes that the shutdown and the looming default deadline increase their political leverage. 
 
 “It’s pretty straightforward that the shutdown is hurting Republicans and weakening their standing,” a senior Democratic aide said. 
 
 But Republicans argue that the painful consequences of breaching the debt ceiling gives them more power to demand policy changes. 
 
 “This position that is being taken by the majority leader in the Senate, as well as the president, that there will be no negotiations, is not something that I think the American people would want,” said House Majority Leader Eric Cantor (R-Va.). 
 
 While polls suggest that Republicans are likely to blamed for the shutdown, both parties took steps Wednesday to contain any potential damage. 
 
 Republicans continued to press a piece-meal approach to funding the government, pursuing one-off bills that would fund the National Institutes of Health and other programs. Obama pledged to veto them, repeating his demand that Congress reopen the entire government. 
 
 Obama took other steps to avoid attracting flak for the shutdown, including taking advantage of a loophole that would allow many veterans to visit shuttered war memorials. Obama also canceled part of a trip next week to Asia to limit the amount of time he might be abroad. 
 
 And on Capitol Hill, lawmakers in both parties pledged to donate their congressional pay to charity during the shutdown. “I shouldn’t get a congressional salary while other federal employees are denied the ability to go to work,” said Sen. Lindsey O. Graham (R-S.C.). 
 
 Lori Montgomery, David Nakamura, Ed O’Keefe and Danielle Douglas contributed to this report.
– In 2011, White House speechwriter Jon Favreau penned some ominous words predicting the disastrous effects of a failure to raise the debt limit, including indefinite delays on Social Security checks and halted troop pay and veterans' benefits. President Obama never had to give the speech, because the debt ceiling was raised "at the last possible moment," Favreau recounts in the Daily Beast—but the showdown still caused serious issues like the downgrading of the US credit rating. "The obvious lesson from this entirely self-inflicted fiasco is never, ever to treat America’s bill-paying authority as a bargaining chip in political negotiations," Favreau writes. But House Republicans haven't learned the lesson, and once again they're holding the economy hostage to their demands. Because of the language we use to discuss it, many people think that raising the ceiling is "a green light to pile up more debt," while "breaching the debt limit would trigger an economic shutdown of epic proportions." So let's call Republicans what they are, says Favreau: "Hostage takers, unrepresentative of the once-proud Republican Party, and unfit to govern the greatest nation on Earth." Click for his full column. Meanwhile, in the New York Times, Paul Krugman agrees: Failure to hike the limit would be a "financial catastrophe," not only returning us to a likely recession but also shaking faith in US bonds—the "bedrock on which the world financial system rests."