Top Lawmaker: US Cannot Afford to ‘Wish or to Wait’ for Debt Deal

Posted July 21st, 2011 at 12:10 pm (UTC-5)
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One of the most powerful lawmakers in the United States is challenging President Barack Obama to back a Republican plan to slash spending and avoid a possible default.

House Speaker John Boehner told reporters Thursday Mr. Obama needs to show leadership and that it is “not enough to wish or to wait for a solution.”

The United States government faces an August 2 deadline to raise its borrowing limit or start defaulting on some of its financial obligations.

Boehner called on the U.S. Senate and the president to back the so-called “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 legislation has already passed in the House but does not have enough support to pass in the Senate. Mr. Obama has also promised to veto the bill.

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

He also said Congress was looking at back-up plans that would raise the $14.3 trillion debt ceiling in order to avoid a default.

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

Boehner Thursday agreed defaulting was not an option, warning that would force credit agencies to downgrade the country’s credit rating and force up interest rates on loans and credit cards.

President Obama has said he is not giving up hope for what he calls a “grand bargain” to raise the borrowing limit while cutting government deficits.

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.

Also Wednesday, White House spokesman Jay Carney said Mr. Obama would accept a short-term measure to raise the debt limit but only 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.