Republicans in the House of Representatives vowed Wednesday to pass legislation that could avert a federal government shutdown on Oct. 1 and avoid a historic national default while simultaneously canceling out President Barack Obama's signature health care overhaul law, the Affordable Care Act.
In response, the president accused the GOP of engaging in political extortion by demanding a delay on "Obamacare" as the price of avoiding default, which he said would hurt the U.S. economy.
"You have never seen in the history of the United States the debt ceiling or the threat of not raising the debt ceiling being used to extort a President or a governing party," Obama told a group of business leaders, reports Reuters.
Nevertheless, Republicans said Wednesday they would add other demands to their list, including approval of the Keystone oil pipeline.
The action on the two separate measures - to continue funding the government and increase the government's borrowing authority by raising the debt ceiling - may begin as early as this week in the House, starting with the funding measure on Thursday or Friday.
The debt ceiling, which could come up next week, is far more consequential because it could rattle world markets and lead to a downgrade of the government's credit rating or cause it to default. Without Congress' approval, the government will be unable to borrow money to pay its debts sometime in mid-October, according to the Treasury Department.
Federal Reserve Chairman Ben Bernanke warned that the consequences of a government shutdown would be detrimental to the national economy and urged congressional leaders to settle the fight over raising the ceiling on government borrowing.
"A government shutdown, and perhaps even more so a failure to raise the debt limit, could have very serious consequences for the financial markets and for the economy," said Bernanke at a news conference, reports the AP.
Republicans said they will include in their temporary spending plan a provision they claim will prevent a debt default if Congress does not raise the debt limit on time.
According to lawmakers, the provision is based on a bill that passed the House in May that allows the government to borrow money to pay bondholders and retirees if Washington hits the debt limit. Most government programs would not be able to continue operating, however, under such a scenario.