Obama warns govt shutdown would wreak economic havoc

With the US government less than 100 hours from a crippling shutdown, President Barack Obama warned Republicans to stop appeasing "extremists" and pass a budget or risk economic chaos.

The president hailed the Senate for clearing a stopgap federal funding measure that knocked the ball into the House of Representatives, where a diehard conservative faction is bent on thwarting Obama's health care law.

The Republican-led lower chamber will likely tweak the bill and send it back to the Senate, which could leave insufficient time for the legislation to pass both chambers before a fiscal year-end deadline of midnight Monday.

"Over the next three days, House Republicans will have to decide whether to join the Senate and keep the government open or shut it down because they can't get their way," Obama said.

Republicans, who are overwhelmingly opposed to so-called "Obamacare," inserted a provision in the House budget measure that strips funding for the health care law, but the Democratic-led Senate removed it and sent the bill back.

Some Republicans would now like to see the Obamacare fight shift to the next fiscal battle -- the need to raise the debt ceiling.

The Treasury says it will reach its USD 16.7 trillion borrowing cap by October 17 and if Congress does not raise it the country will default on its debts for the first time in history.

The president made clear he would brook no quarter, saying a default "would have a profound destabilising effect on the entire economy -- on the world economy."

"We've got to break this cycle," Obama added. "My message to Congress is this: do not shut down the government. Do not shut down the economy. Pass a budget on time. Pay our bills on time."

With the threat of a shutdown likely already having "a dampening effect on the economy," Obama suggested it was time for House speaker John Boehner to isolate the "extremists" who are holding the Republican Party captive.

"Nobody gets to threaten the full faith and credit of the United States just to extract political concessions," Obama said. "No one gets to hurt our economy and millions of innocent people just because there are a couple of laws that you do not like."

House leaders insist they do not want a shutdown or a default, and they have scheduled sessions for today and possibly Sunday in their effort keep government doors open beyond Monday's end of the fiscal year.