Intense Talks Continue to Avoid Default on US Debt

Posted July 21st, 2011 at 8:40 pm (UTC-5)
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Intense talks are continuing in Washington on a possible deal to cut spending and avoid a possible default on the United States' massive debt.

U.S. President Barack Obama held talks late Thursday at the White House with top Democratic lawmakers, including Senate Majority Leader Harry Reid and Congresswoman Nancy Pelosi, the minority leader in the House of Representatives.

Earlier, White House spokesman Jay Carney rejected media reports that Mr. Obama and Republican House Speaker John Boehner were on the verge of a major deal.

But Carney said the White House is “absolutely confident” Congress will move to raise the nation's $14.3-trillion borrowing limit by the August 2 deadline. He said the U.S. will not default on its obligations.

Weeks of talks between the White House and Congress have stalled over ways to reduce the country's debt. Boehner said again Thursday that Republicans will not support any plan that raises taxes.

The U.S. Treasury Department, the central bank and the White House have all warned a default would have catastrophic consequences for the economy.

Republican lawmakers, led by Boehner, want the president to endorse their so-called “Cut, Cap, and Balance Act.” The plan would agree to raise the debt ceiling in exchange for large cuts in the federal budget. It would also require a constitutional mandate for a balanced federal budget.

The legislation has already passed in the House, but Mr. Obama has promised to veto the bill if it is approved in the Senate.

Boehner said Thursday defaulting is not an option, saying that would force credit agencies to downgrade the country's credit rating and force up interest rates on loans and credit cards.

President Obama also met Thursday with representatives from the country's two largest civil rights groups, the National Urban League and the National Association for the Advancement of Colored People .

The White House said Mr. Obama stressed in the meeting that any deficit and debt agreement must involve shared sacrifice, but that the budget cannot be balanced in a way that affects Americans such as the middle class, low-income families, seniors and students.