'No deal' on ending US debt impasse
Friday 22 July 2011
President Barack Obama insisted he was prepared to make "tough choices" for a sweeping deficit-reduction deal to avert a US default, despite being warned by Democrats not to make too many concessions.
With the deadline to raise the US debt ceiling now just 11 days away, Obama appealed for compromise by both parties as he and the top Republican in Congress, House of Representatives Speaker John Boehner, pursued a plan for up to $3 trillion in spending cuts over the next 10 years.
"I'm willing to sign a plan that includes tough choices I would not normally make, and there are a lot of Democrats and Republicans in Congress who I believe are willing to do the same thing," Obama said at a townhall-style meeting at the University of Maryland.
While an agreement did not look imminent, Obama faced increasingly vocal complaints from his own Democrats on a deal-in-the-making that could mean painful curbs in popular health and retirement programs but no immediate increase in taxes.
"I've never seen frustration higher," Democratic Senator Dianne Feinstein said.
Negotiations between Republicans and the Democratic White House toward a deal to raise the $14.3 trillion limit on America's borrowing are at a critical phase, with less than two weeks before the world's biggest economy runs out of money to pay its bills.
Obama maintained that it would be impossible to achieve the kind of "historic" deficit-reduction deal he is seeking without including revenue increases through such measures as reforming the tax code and ending tax breaks for wealthier Americans.
But congressional sources have said that the deal now being crafted with Boehner might leave tax reform and other major revenue-boosting steps for later.
Republicans and many Democrats are refusing to raise the debt limit unless it is accompanied by steep spending cuts to tackle rising budget deficits.
An unprecedented national default could push the United States back into recession and trigger global financial chaos.
Treasury Secretary Timothy Geithner met on Friday with Federal Reserve Chairman Ben Bernanke and New York Fed President William Dudley to talk about the implications for the US economy if Congress failed to raise the debt.
The Treasury said the three remained confident Congress would act in time.
The hope in Washington is that a wide-ranging package of deficit cuts being worked out will be enough to save America's triple-A credit rating. Rating agencies have threatened a US bond downgrade without a comprehensive deficit-cutting deal.
"We have never defaulted on our debt and we're not about to do it now," Obama said.
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