U.S. President Barack Obama, his Democratic party allies in Congress and opposition Republicans are still haggling over competing plans to raise the government borrowing limit as an August 2 deadline draws closer. Without an agreement, Washington could default on some of its obligations.
Uncertainty caused by the bitter partisan debate and the lack of apparent progress toward a compromise have worried investors. That is why many stock markets have declined and the value of “safe-haven” investments like gold and the Swiss Franc have hit record highs against the U.S. dollar.
Republican leaders have delayed a vote on their plan until at least Thursday because budget experts said the bill did not cut spending as much as promised. They are revising the plan to make deeper cuts. Democrats oppose the plan by Republican Speaker of the House John Boehner because it would raise the debt ceiling in two stages, setting up another divisive debate next year over spending, taxes, and debt.
A rival plan by Senate Majority Leader Harry Reid would cut $2.7 trillion over 10 years, and does not propose tax increases that Republicans adamantly oppose. Republicans have said the plan overstates the value of its cuts.
White House Chief of Staff William Daley says he is confident the United States will not default on its debt. He told television interviewers that there are a lot of debt reduction plans on the table and everyone is stressed as the August 2 deadline approaches. But he said that, in the end, Congress will do what is right.