President, Lawmakers Continue US Debt Talks

Posted July 21st, 2011 at 7:35 am (UTC-5)
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U.S. President Barack Obama and members of Congress continue the search Thursday for a compromise on how to raise the country’s debt limit, as an August 2 deadline approaches to avoid a potentially catstrophic default.

President Obama says he is not giving up hope for what he calls a “grand bargain” to raise the country’s borrowing limit while slashing government deficits. But Mr. Obama also indicated he may be open to an interim deal to raise the debt ceiling.

White House spokesman Jay Carney said Mr. Obama would accept a short-term measure to raise the debt limit as part of a broader deficit reduction plan, conceding that extra time may be necessary for a sweeping bill to work its way through the legislative process.

Less than two weeks remain before the government would begin defaulting on its $14.3-trillion debt.

On Wednesday, President Obama held talks at the White House with congressional leaders on a plan put forth by a bipartisan group of U.S. senators known as the “Gang of Six.” The plan calls for $500 billion in immediate spending cuts as part of a larger effort to slash spending by nearly $4 trillion in the next decade. It also would make significant changes to social welfare programs and raise $1 trillion in tax revenues over 10 years.

The Democratic-controlled Senate will begin voting on a separate plan, known as the “Cut, Cap, and Balance Act.” The plan would agree to raise the debt ceiling in exchange for cutting more than $100 billion from the federal budget next year. It would also require a constitutional mandate for a balanced federal budget.

The bill is not expected to pass the Senate. Mr. Obama has also said he will not support the measure.

The U.S. is facing an August 2 deadline to raise the $14.3-trillion debt ceiling, or start defaulting on some of its obligations for the first time in history. Efforts to forge an agreement have stalled because of disagreements on raising revenues and making cuts to social safety net programs.