Obama: Urgent Action Needed On Debt Deal

Posted July 11th, 2011 at 5:35 pm (UTC-5)
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President Barack Obama will meet again Tuesday at the White House with U.S. congressional leaders, after no breakthrough in their talks Monday for an elusive deal to raise the country's debt ceiling.

Before all sides gathered for their meeting on Monday, Mr. Obama said at a televised news conference that it is time to stop playing politics and make a deal. He said there is a lot of work to do before the August 2nd deadline when the United States would default on its debt for the first time in its history.

The president also took away one Republican-proposed option when he said he will refuse to sign any temporary measures to resolve the debt crisis.

The speaker of the House of Representatives, Republican John Boehner, said Monday that no deal can pass the House unless it rules out tax increases and cuts spending. Conservatives say it makes no sense to raise taxes on those Americans who are expected to invest in the economy and create jobs.

Democrats strongly oppose cuts in popular social programs for the poor and elderly. They say increasing taxes on the wealthy is essential because the government badly needs more revenue to close the budget gap.

Treasury Secretary Timothy Geithner has said that failing to raise the $14.3 trillion legal limit on what the government can borrow to pay its debts would cause “catastrophic damage” to the U.S. economy.

The new head of the International Monetary Fund, Christine Lagarde, has said a U.S. default would have “real nasty consequences” for the global economy, including higher interest rates and falling stock prices. But she said she cannot imagine U.S. leaders letting the nation default on what it owes investors.