Congress still divided - Gov't shutdown could spark worse recession

WASHINGTON (AP):A fruitless meeting between President Barack Obama and congressional leaders deepened the impression that the government shutdown could persist into mid-October and become entangled with an even more consequential battle over raising the nation's borrowing limit to avoid a disastrous debt default.

The United States (US) Treasury warned yesterday that failure to raise the debt ceiling could spark a new recession, even worse than the one Americans are still recovering from.

The shutdown limped into its third day yesterday, keeping hundreds of thousands of federal workers home and affecting Americans in ways large and small. Scores of government programmes, from feeding pregnant women to staffing call centres at the federal tax agency, were disrupted. Obama truncated a long-planned trip to Asia.

Funding for much of the government has been cut off since Tuesday, when a Republican effort to thwart the nation's new health-care law stalled a short-term, normally routine spending bill.

At the White House meeting Wednesday, Obama reiterated his demand that the Republican-controlled House of Representatives pass the bill without threatening his health-care overhaul.