Obama Cites Progress on Debt Talks, But No Deal

Posted July 7th, 2011 at 1:25 pm (UTC-5)
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U.S. President Barack Obama and key lawmakers have failed to bridge deep divides over how to slash the nation’s debt and avoid a possible default.

Mr. Obama told reporters at the White House Thursday a meeting with Congressional leaders was “very constructive” but that the sides had yet to reach an agreement to raise the country’s debt limit.

Without raising the limit, the U.S. could default on some of its loans. U.S. Treasury officials have repeatedly warned that would have “catastrophic” consequences for the economy.

Despite failing to resolve key differences, the president praised the lawmakers for their willingness to work with the White House. He said everyone agreed the debt limit must be raised and that he expected to meet with Congressional leaders again on Sunday for what he called “hard bargaining.”

Earlier Thursday, White House and congressional aides said Mr. Obama would propose doubling the amount of money trimmed from the country’s budget deficit to $4 trillion.

The top Republican in the House of Representatives, Speaker John Boehner, said he would continue to oppose any proposal that raises taxes. But he also told reporters he would be willing to discuss a comprehensive reform of the U.S. tax system.

Officials said the latest proposal from the president included significant cuts to Social Security and Medicare – two of the country’s biggest social safety nets. But it also called for increasing tax collections from large corporations and letting tax cuts expire for the wealthiest households.

Talks between the White House and Republican leaders in Congress fell apart two weeks ago, when they failed to agree over a package that would have reduced the country’s budget deficit by about $2 trillion over the next 10 years.

Washington has run up a total debt of $14.3 trillion, the current legal borrowing limit. If the limit is not increased before August 2, the U.S. could default on some of its loans.

Meanwhile, one of America’s richest men criticized Congress for playing “Russian roulette” by bickering over whether to raise the debt limit. Billionaire investor Warren Buffet told cable television network CNBC that lawmakers were being counterproductive by using the issue for political purposes.