Tuesday Morning Political Mix

NPR | By Frank James

Published October 8, 2013 at 7:54 AM EDT

Despite all the warning signs, U.S. leaders continue to barrel toward a debt default with no one yet willing to step on the brakes.

Good morning, fellow political junkies. It's Day 8 of the partial shutdown of the federal government. Among the only certainties: many federal workers are a day closer to missing a paycheck and the nation is a day closer to hitting the debt ceiling.

While no solution to the shutdown appears close, official Washington seems to be shifting its attention to the fight over raising the debt-ceiling. Indeed, the two fights appear to be merging, suggesting that they'll both be resolved together. Whether that will be in time to avoid a parade of horribles is another matter.

With that as the backdrop, here are some of the more interesting stories of greater or lesser political import that caught my eye this morning.

Large foreign holders of U.S. debt are urging American policymakers to resolve their differences and raise the debt ceiling, reports Bloomberg News' Keiko Ujikane. Officials from China and Japan, two of the largest holders of U.S. bonds, warned a default would likely cause them to unload significant investments in U.S. Treasuries. That could lead to sharply higher U.S. interest rates.

Democrats have been remarkably unified throughout the current fiscal fight. A bit of daylight appeared between them Monday, however, when a top Obama administration official said the White House might find a short-term debt ceiling raise acceptable, an idea with little traction among Senate Democrats. They sought clarity and seemed satisfied by White House officials' reassurances, reported Politico's Manu Raju and John Bresnahan.

Senate Democrats are moving ahead with legislation to raise the debt ceiling without any strings attached. But there's the very real possibility of a Republican filibuster, ABC News' Jeff Zeleny reports.

A voter backlash against the federal government shutdown appears to be a factor in Democrat Terry McAuliffe's large, nine-point lead in the Virginia governor's race over Republican Ken Cuccinnell, writes Politico's Alexander Burns. Virginia is very dependent on the U.S. government, since many federal employees and contractors reside in the state.

Wall Street's relative calmness to date as the U.S. government approaches the debt ceiling with no agreement to raise it is causing worries that members of Congress could mistakenly conclude they need not worry about how dangerous the situation really is to financial markets, writes the New York Times' Nathaniel Popper.

Top bankers are warning that the U.S. can't avoid default by prioritizing its debt payments, as some Republicans have suggested. Even if it paid the interest on its treasury notes, the government's failure to make other payments would raise doubts among investors and consumers, write The Wall Street Journal's Deborah Solomon and Dan Strumpf.

Americans seem about equally split over which side should move first in the government-shutdown fight. The Pew Research Center found 44 percent of respondents saying Republican leaders should yield first while 42 percent said President Obama should. The divide was largely along partisan lines.

Contrary to what many critics say about the Affordable Care Act, small businesses might actually benefit greatly from Obamacare, writes the New Yorker's James Surowiecki. The new law will allow more people to start small businesses in the first place since many people won't feel the need to remain employees of large companies because it's the only way they can afford health insurance.