Obama says he'll negotiate once 'threats' end

'FISCAL CRISIS'

Japan's finance minister said a failure by the United States to quickly resolve its political deadlock over government finances could damage the global economy.

"The US must avoid a situation where it cannot pay (for its debt) and its triple-A ranking plunges all of a sudden," Japanese Finance Minister Taro Aso told reporters after a cabinet meeting.

"The US must be fully aware that if that happens, the US would fall into fiscal crisis," he said in the latest sign that Japan and China, the biggest foreign creditors to the United States, are worried the fiscal crisis could harm their trillions of dollars of investments in US Treasury bonds.

The US Chamber of Commerce, a traditional supporter of pro-business Republicans, also warned about further delays in reopening the federal government and raising Treasury's borrowing authority.

"The debt ceiling specifically must pass on a timely basis to avoid inflicting substantial and enduring damage on the US economy," said Bruce Josten, the group's executive vice president.

Polls show growing public concern over the impasse, with Republicans getting slightly more of the blame.

A Reuters/Ipsos poll on Tuesday found the percentage of Americans concerned about the shutdown rose to 75 percent from 66 percent last week. Blame for Republicans grew to 30 percent from 26 percent, with the level of blame for Obama and Democrats at 19 percent, up from 18 percent.

Plenty of obstacles remain to settling the issue. US Senate Democrats plan to introduce a bill on Tuesday to raise the government's borrowing authority by enough to last through 2014.

The measure would not contain any of the deficit reductions that Republicans have demanded, a Senate Democratic aide said.

Republican leaders unveiled a proposal for a 20-member committee to make recommendations on a debt limit increase and look at ways to rein in the country's deficits, but Democrats quickly rejected the idea.

Under the legislation, the Republican House would name 10 members to the panel while the Democratic-led Senate would name the other 10. The panel would also make recommendations on a measure to fund the government for the 2014 fiscal year, ending the shutdown.

The plan is reminiscent of a failed 2011 "supercommittee" of Republicans and Democrats from the House and Senate that was asked to find trillions of new budget savings.

Obama was among the skeptics: "I don't know that we need to set up a new committee for a process like that to move forward."

Despite widespread warnings about failing to raise the debt limit, some House Republicans dismissed the prospect of a first-ever default.

"There's no way to default. There is enough money coming into the Treasury to pay interest and roll over principle," said Representative Justin Amash of Michigan, a favorite of the smaller-government Tea Party wing of the Republican Party.

Asked about warnings of catastrophic consequences if the debt limit is not increased, Amash told reporters: "I say it's patently not true what they are saying."

A Democratic aide said Democrats were hopeful they could get the 60 votes needed to overcome procedural hurdles in the 100-member Senate and pass the debt ceiling bill with no strings attached.

The measure would likely run into opposition from Senate Republicans such as Ted Cruz of Texas, who has been leading the drive to make delaying Obama's healthcare law a condition for raising the debt ceiling.