Debt deadlock
July 29, 2011
In another attempt to break the deadlock, Obama appealed on Friday to both sides of the House to reach a compromise that would allow the country to raise the federal debt limit and avert a potential default.
He told deeply divided Republicans and Democrats to stop arguing and find a way "out of this mess."
"This is not a situation where the two parties are miles apart," he said in a White House statement.
"What's clear now is that any solution to avoid default must be bipartisan. It must have the support of both parties that were sent here to represent the American people."
His latest warning came after the House delayed its expected vote on a plan by Speaker John Boehner to raise the US debt ceiling and make massive spending cuts in the face of a possible default.
Boehner, who had earlier seemed assured he had enough votes to pass the legislation, was apparently struggling to rally his party’s support behind the plan. Hours after initially promising to reconvene the House later in the evening, House Republicans announced that there would be no vote on Thursday and that they would instead try to pass a revised bill on Friday.
With the clock ticking, Democrats have accused Republicans of wasting precious time on legislation they say has no hope of becoming law.
If passed by the House, Boehner's bill is unlikely to get through the Democratic-controlled Senate, while President Obama has already threatened to veto the bill, saying it "does not solve the problem."
Democrat Senator John Kerry called the expected back-to-back House and Senate votes on the plan a "useless exercise," expressing concern that the US Congress may not make its Tuesday deadline to raise its debt limit.
"I can't emphasize enough how serious it is on a global basis," Kerry, who chairs the Senate Foreign Relations Committee, told reporters, adding, "I'm hearing people all over the world who are jittery about what the United States is doing, what the impact is."
"Spain and Italy are both very fragile right now and they're all looking at us right now."
Edging toward default
The US Treasury has said that it will not be able to meet all its obligations and could risk an unprecedented default on loans, triggering a downgrade of US credit ratings, unless Congress passes an increase in the debt limit by Tuesday.
The federal debt limit currently stands at $14.3 trillion (10 billion euros).
The Republicans, especially their ultra-conservative Tea Party faction, want to slash federal spending before agreeing to raise the debt ceiling. Boehner's bill would raise the debt limit by $900 billion in two phases this year.
However, Obama wants a higher cap so that the US can borrow enough funds to keep it running through the end of next year. Obama has argued that another round of negotiations would be impractical ahead of 2012 elections.
World markets were watching anxiously events in Washington, unnerved by the risk of a US default or credit downgrade. A failure by Congress to meet its August 2 deadline could trigger a payment crunch that would rock the global financial system and could send the US into a new recession.
Author: Rob Mudge, David Levitz (AFP, dpa, Reuters)
Editor: Kyle James