Obama: Default would trigger 'chaos'

• President Obama says his staff as looking at %27contingencies%27 to avoid default
• The easiest way to avoid default%2C Obama said%2C is to increase the debt ceiling
• Obama also called for end to government shutdown%2C now in its eighth day

President Obama said Tuesday his staff is "exploring all contingencies" to avoid a government default, but stressed that Congress can head off economic calamity by simply raising the debt ceiling.

"There is no magic wand that allows us to wish away the chaos that could result if -- for the first time in our history -- we don't pay our bills on time," Obama said during a news conference at the White House.

On the eighth day of a government shutdown, Obama used the traditional forum of a news conference to deliver a familiar message to House Speaker John Boehner and other congressional Republicans: No negotiations until the government is re-opened and the debt ceiling is risked.

As Republicans insist on delaying parts of his his health care plan as part of any new spending plan, Obama said that "we can't make extortion routine as part of our democracy."

Once the shutdown is over and the debt ceiling is increased, Obama said he would negotiate any budget item with the Republicans, including health care.

House Republican leaders on Tuesday raised the possibility of a new special budget committee, to which Obama said: "I'm prepared to talk about anything. They can design whatever format they want."

Obama addressed reporters a few hours after delivering the same news to Boehner in a morning phone call.

Boehner said he was disappointed at the president's refusal to negotiate, and that White House is seeking "unconditional surrender" from the GOP. Republicans don't want the government to default, Boehner said, but any increase in the ceiling should be accompanied by plans to reduce the nation's debt long-term.

"The long and short of it is, there's going to be a negotiation here," Boehner told reporters. "I want that conversation to occur now."

During his news conference, Obama also said:

-- The shutdown forced him to skip an economic summit in Asia, giving China and other trade competitors the chance to say the U.S. doesn't have its act together.

"I'm sure the Chinese don't mind that I'm not there," Obama said, though he added he doesn't think his absence will do "lasting damage."

Saying that U.S. teams often to do more to organize international meetings, Obama said his lack of attendance is like "not showing up to my own party. I think it creates a sense of concern on the part of other leaders."

-- Suggested the Supreme Court uphold limits on political campaign contributions as part of a pending case; Obama has criticized previous high court rulings in campaign finance cases.

The latest case could be used to "say anything goes," Obama said, "there are no rules in terms of how to finance campaigns."

-- Vowed that recently captured al-Qaeda suspect Abu Anas al-Libi will be brought to justice in connection with the 1998 bombings of U.S. embassies in Africa.

Asked about a pair of raids in Africa last weekend, Obama said the continent has become a gathering place for terrorist groups.

In some cases that's because of the "lack of capacity on the part of the governments," and in others because "it is easier for folks to hide out in vast terrains that are sparsely populated," Obama said.

The ongoing government shutdown and the specter of a debt default dominated the presidential news conference.

While calling for an immediate end to the shutdown, Obama is also looking toward an Oct. 17 deadline for increasing the nation's $16.7 trillion debt ceiling, the law that gives the government authority to borrow money to pay its bills.

Refusal to raise the debt ceiling would lead to default, Obama said.

The president criticized congressional Republicans for suggesting that the government could get around default, or defer some bills. He said that's like saying, "we should test it out -- let's take default out for a spin and see how it rides."

Noting that the GOP has traditionally been the party of business, Obama said "there's no businessperson out here who thinks this wouldn't be a big deal, not one."

In discussing suggested alternatives to a debt ceiling hike, Obama said there is too much legal uncertainty about the claim that presidents have the power under the 14th amendment of the U.S. Constitution to pay the debt on their own authority.

Obama also questioned a proposal, known as prioritization, that would have the U.S pay the interest on its debts and defer other bills.

While declining to discuss specifics -- Treasury Secretary Jack Lew will testify before the Senate on Thursday, he noted -- Obama did tell reporters: "You cannot pay some bills and not others and think somehow that the fact that you're paying some bills protects you from a loss of credit worthiness."

A drop in the nation's credit rating, as happened when the government flirted with default under similar circumstances in 2011, would increase U.S. costs and could plunge the nation back into recession, Obama said.

"We plan for every contingency," Obama repeated. "So obviously, you know, worst-case scenario, there are things that we will try to do -- but I will repeat, I don't think any option is good."

Obama mocked other suggestions, saying at one point that he couldn't just "roll out a big coin" -- a reference to a suggestion floated from time-to-time that the government could mint a trillion-dollar coin.

Contributing: Susan Davis