Obama rejects Republican 'threats' in budget standoff

A defiant US President Barack Obama on Wednesday said he is willing to open talks with Republicans to defuse the budget crisis that has caused the crippling government shutdown, but refused to be intimidated by their "extortion threats" regarding his contentious healthcare plan.

Taking on his political opponents, Obama said Republicans "don't get to demand ransom in exchange for doing their jobs" by demanding policy concessions before allowing the government to reopen and raise the debt limit in the face of an unprecedented debt default.

Obama, who made a surprise phone call to the Speaker of the House of Representatives John Boehner, also made it clear that he would not hold talks to end the deadlock over the federal budget while under threat from conservative Republicans, but agreed to discuss anything, including his ambitious healthcare plan dubbed 'Obamacare', if they restore government funding and raise the debt limit.

"If reasonable Republicans want to talk about these things again, I'm ready to try," Obama said. He said any negotiations on the ongoing government shutdown or the debt limit "shouldn't require hanging the threats of a shutdown or economic chaos over the heads of the American people".

"We can't make extortion routine as part of our democracy," Obama said. "Democracy doesn't function this way. And this is not just for me. It's also for my successors in office, whatever party they're from."

He also warned of the repercussions of defaulting on the government's debt if Congress fails to raise the borrowing limit, currently set to be reached on October 17.

Obama said a default could disrupt capital markets, undermine international confidence in America, permanently increase the nation's borrowing costs, add to its deficits and debt, and pose a "significant risk of a very deep recession".

Boehner, speaking after what he called a "pleasant" but ineffectual phone call with Obama, promptly rejected the president's comments as nothing new. "What the president said today was if there's unconditional surrender by Republicans, he'll sit down and talk," he said. "That's not the way our government works."

At the same time, Boehner said he's "hopeful" top Republicans and Democrats could soon begin a "conversation."

Republicans who control the House of Representatives have refused to approve the budget, saying they would only do so if the healthcare programme was delayed or stripped of funding.