By Susan Heavey

WASHINGTON (Reuters) – U.S. lawmakers in the Senate said on Monday they hoped to reach a deal soon to reopen the government and avert a looming default as investors worried that Republicans and Democrats might not be able to resolve their differences by a Thursday deadline.
After weekend negotiations proved fruitless, senators from both parties said they still thought they could reach agreement in the coming hours. With the most unrealistic demands off the table, the two sides were trying to craft a temporary measure that would allow Washington to step back from the ledge.
“I’m hopeful we can have something meaningful by the end of the day,” Republican Senator Roger Wicker of Mississippi said on MSNBC.
The Treasury Department says it cannot guarantee that the U.S. government will be able to pay its bills past October 17 if Congress does not raise the $16.7 trillion debt ceiling by then.
It’s not clear whether Congress can meet that deadline. Even if Republicans and Democrats in the Senate reach agreement on Monday, hard-liners such as Texas Republican Senator Ted Cruz might be able to delay a vote for several days.
The House of Representatives also would need to sign off on the plan. Republican leaders there face strong pressure from a vocal conservative flank that is deeply reluctant to make concessions to President Barack Obama and his Democrats.
Many say they won’t back any deal that doesn’t undercut Obama’s 2010 healthcare reform law, the Affordable Care Act – a non-starter for Democrats.
“We’ve got to draw some lines in the sand now. This, to me, is an epic battle over Washington versus America, and I hope America wins,” Republican Representative Matt Salmon of Arizona said on CNN.
Analysts expect that any deal is likely to come down to the wire.
Though Treasury likely will have enough cash on hand to meet its obligations for a week or so, it might be forced to pay a higher interest rate on the bonds it is due to issue on Thursday.
Banks and money market funds are already shunning some government bonds that are normally used for short-term loans. In China, the largest foreign holder of U.S. debt, the state news agency Xinhua said it was time for a “de-Americanized world.”
U.S. stocks fell at the open on Monday. The S&P 500 Index was down 0.53 percent and the Dow Jones Industrial Average was down 0.48 percent by mid-morning.
The ongoing government shutdown is beginning to weigh on the economy as well. The hundreds of thousands of federal employees who have been temporarily thrown out of work are likely to get back-pay when the standoff is resolved. But they aren’t getting paid now, forcing many to dial back on personal spending and cancel holiday travel plans.
Any agreement that would come in the following days would not resolve disagreements over long-term spending and the Affordable Care Act that led to the standoff in the first place. Despite the objections of rank-and-file conservatives like Salmon, many Republicans are eager to move the discussion away from “Obamacare” and toward possible spending cuts.
“All of us now are talking about spending, which is where we should have been in the first place,” Republican Senator Bob Corker of Tennessee said on MSNBC.
Republicans have floated plans that would push back any possible default for several weeks and keep the government open for several months, but Democrats say that would simply set up another market-rattling confrontation which could spook consumers and further weigh on the economic recovery.
“If we just extend this to January, we’ll be right back in the middle of this,” Democratic Senator Mark Begich of Alaska said on MSNBC.
(Writing by Andy Sullivan; Editing by Karey Van Hall and Claudia Parsons)

From Wire and Staff Reports

WASHINGTON, D. C.  – Put the Quran down and come out with your hand up and leave the country!!!
Angered by the closure of national landmarks due to the partial government shutdown, a crowd of conservatives removed barricades Sunday at the World War II Memorial and the Lincoln Memorial as they rallied against President Barack Obama and Democrats for their role in the ongoing stalemate.
High-profile speakers with close ties to the tea party appeared at the event, including former Alaska Gov. Sarah Palin and Sen. Ted Cruz of Texas.
The rally, billed as the “Million Vet March on the Memorials,” drew far fewer than a million people and evolved into a protest that resembled familiar tea party events from 2009, with yellow “Don’t Tread On Me” flags throughout the crowd and strong anti-Obama language from the podium and the audience.
One speaker went as far as saying the president was a Muslim and separately urged the crowd of hundreds to initiate a peaceful uprising.
“I call upon all of you to wage a second American nonviolent revolution, to use civil disobedience, and to demand that this president leave town, to get up, to put the Quran down, to get up off his knees, and to figuratively come out with his hands up,” said Larry Klayman of Freedom Watch, a conservative political advocacy group.
On the first day of the government shutdown, October 1, a group of World War II veterans was barred from entering the open-air memorial. But with the help of a few Republican members of Congress, the veterans removed the barricades and streamed onto the site, as security guards stood aside.
The Department of Interior has since said that veterans with the Honor Flight program will be permitted to visit the memorial as part of their First Amendment rights, but otherwise the site is closed to the general public until the government reopens.
Cruz, the senator who’s become the face of the Republican stance in the shutdown, attacked the Obama administration for fencing off the memorial and other national monuments, saying the closures were nothing but a political ploy.
“This is the people’s memorial. Let me ask a simple question. Why is the federal government spending money to erect barricades to keep veterans out of this memorial?” he asked. “Our veterans should be above politics. Enough games.”
Demonstrators removed the barricades Sunday at the rally, tossing them into a pile nearby. After the speeches, the crowd wandered down to the nearby Lincoln Memorial and removed its barriers as well. When some officers tried to put them back up, protesters took them from the officers’ hands and carried them away from the memorial.
“You look around though and you see these barricades and you have to ask yourself, is this any way that a commander in chief would show his respect, his gratitude to our military? This is a matter of shutdown priorities,” Palin said.
Anti-Obama sentiments echoed throughout the crowd Sunday, with one protester yelling out “punk” to describe the president and one speaker saying Obama is not the president of “the” people but “his” people. Multiple signs read “Impeach Obama.”
Asked last week whether the White House had any say in the closure of the World War II Memorial, spokesman Jay Carney said Republicans were at fault.
“Every House Republican who has decried any impact from this shutdown, as if they were surprised that it would happen, clearly didn’t pay attention when every agency of the federal government posted on their websites … what would happen if the government were shut down, including the closing of national memorials and national parks,” he said at a press briefing.
“If any member of Congress who got in front of a television camera to try to get some attention on this issue spent half that time on the floor of the House voting to open the government, we wouldn’t have a problem,” he added.
Later on Sunday, some people from the rally walked over to Pennsylvania Avenue carrying the barricades and dumped them in front of the White House. While they gathered peacefully for the most part, some were more vocal and shouted at police on horseback. “You work for us,” some chanted.
At one point, some pushing and shoving took place as police in riot gear began to put up some barricades in front of part of the White House fence.
Tourists were also among the mix Sunday, taking pictures as normal, while others simply came out of curiosity.
Ashley Killough wrote; Shannon Travis and Brian Rokus reported from the National Mall and the White House. CNN’s Jim Acosta also contributed from the White House.