WASHINGTON - President Barack Obama said he expects Congress will reach an agreement to raise the nation's $16.7 trillion borrowing limit in time to avert a default.
"America has never not paid its bills," Obama said in an interview with the Associated Press. "I don't expect to get there.".
The interview was released Sunday as a partial shutdown of the US government entered its fifth day and less than two weeks before an Oct 17 deadline for raising the US debt ceiling. Obama said comments Saturday from House Speaker John Boehner, an Ohio Republican, indicate that "Speaker Boehner is willing to make sure that we don't default.".
The federal government shutdown that has furloughed about 800,000 federal employees is becoming a prolonged deadlock that is merging with the debate over the US debt ceiling.
The US will run out of borrowing authority on Oct 17 and will have $30 billion in cash after that. The country would be unable to pay all its bills, including benefits, salaries and interest, sometime between Oct 22 and Oct 31, according to the Congressional Budget Office.
Unlike budget clashes, the current standoff revolves around Republicans opposition to Obama's health-care law. House Speaker John Boehner is insisting Democrats make concessions on the 2010 Affordable Care Act to provide the funds to keep the government open.
Obama canceled an eight-day trip to Asia to promote economic and national security policy because of the government shutdown. US Trade Representative Michael Froman said in a statement that the government wouldn't be able to participate in next week's second round of negotiations on the Trans-Atlantic Trade and Investment Partnership in Brussels.
The Treasury Department said on Oct 3 that breaching the debt limit may have catastrophic results that last decades, such as higher interest rates and slower growth.
US stocks rose last week on optimism lawmakers would come to an agreement. Ten-year Treasury yields rose from almost a seven-week low, increasing four basis points to 2.65 per cent, according to Bloomberg Bond Trader prices.
As the economy has revived, the budget deficit has shrunk as a share of the economy: in June, it was 4.3 per cent of gross domestic product, down from 10.1 per cent in February 2010 and the narrowest since November 2008, when Obama was elected to his first term, according to data compiled by Bloomberg from the Treasury Department and the Bureau of Economic Analysis.
After a private meeting of House Republicans Saturday, Boehner criticised Obama's refusal to negotiate on any changes to the health law.
"The White House's refusal to negotiate is putting the nation at risk of default," Boehner spokesman Brendan Buck said. "If we're going to resolve this, we're going to have to work together."