Shutdown bites economy, US Coast Guard, as talks stall

WASHINGTON The US economy is taking a larger-than-expected hit from the partial government shutdown, White House estimates showed on Tuesday, as contractors and even the Coast Guard go without pay and talks to end the impasse seem stalled.

The longest such shutdown in US history dragged on with neither President Donald Trump nor Democratic congressional leaders showing signs of bending on the topic that triggered it - funding for a wall Mr Trump promised to build along the border with Mexico.

He insists Congress shell out US$5.7 billion (S$7.7 billion) for wall funding this year, as about 800,000 federal workers go unpaid during the partial shutdown.

He has refused to support legislation providing money for a range of agencies to operate until he gets the wall funds.

With the shutdown dragging on, federal courts will run out of operating funds on Jan 25 and face "serious disruptions" if the shutdown continues, according to a court statement.

To try to take some of the sting out, Mr Trump has planned to sign the Government Employee Fair Treatment Act of 2019, legislation that would ensure that those federal workers furloughed will receive backpay once the shutdown is over.

The Internal Revenue Service said it planned to bring more than 46,000 furloughed workers back to their jobs as the agency enters its peak season of processing tax returns and refunds.

Mr Trump invited a bipartisan group of lawmakers for lunch to discuss the stand-off, but the White House said Democrats turned down the invitation.

Nine House of Representatives Republicans attended.

One attendee, Mr John Katko, told CNN that Mr Trump "wanted to continue to engage in negotiations". He did not mention any new proposals Mr Trump might pursue.

House Democratic leaders said they did not tell members to boycott Mr Trump's lunch but had pressed those invited to consider whether the talks would be merely a photo op for Mr Trump.

SOLUTIONS

Separately, a bipartisan group of senators explored solutions.

Senator Lisa Murkowski, a Republican participant, told reporters in a Capitol hallway that the group had "momentum" but gave no details.

Lawmakers were supposed to be in their districts and states next week after Monday's Martin Luther King Jr holiday, but the House and Senate planned to cancel the recess if the shutdown persists.

A Reuters/Ipsos poll released on Tuesday found nearly four in 10 US adults were either affected by the impasse or know someone who is. Fifty-one per cent of those polled blamed Mr Trump for the shutdown.

Homeland Security Secretary Kirstjen Nielsen said she was working with the White House and Congress to pass legislation to fund the Coast Guard. The Coast Guard budget is part of Ms Nielsen's department.

"Like the other branches of the US military, active duty #USCG should be paid for their service and sacrifice to this nation," Ms Nielsen tweeted.

The Trump administration had initially estimated the shutdown would cost the economy 0.1 percentage point in growth every two weeks that employees were without pay.

But on Tuesday, there was an updated figure: 0.13 percentage point every week because of the impact of work left undone by 380,000 furloughed employees as well as work left aside by federal contractors, a White House official said.

The economic risk prompted hawkish Federal Reserve officials to call for the central bank to pause interest rate hikes.

The shutdown's effects have begun to reverberate across the country.

Longer lines have formed at some airports as more security screeners fail to show up for work.

Speaking on CNBC, Delta Air Lines chief executive officer Ed Bastian said the partial shutdown would cost the airline US$25 million in lost revenue in January because fewer government contractors are travelling.

- REUTERS