White House Reports ‘No Progress’ on Debt Deal

Posted July 21st, 2011 at 3:10 pm (UTC-5)
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A White House spokesman says he has no progress to report on a deal to slash spending and avoid a possible default on the country's massive debt. But he also guaranteed the country will pay its bills on time.

Obama administration spokesman Jay Carney told reporters Thursday the White House “is absolutely confident” Congress will move to raise the nation's $14.3-trillion borrowing limit by the August 2 deadline.

Carney's repeated assertions that Washington will not default on its obligations came just hours after a challenge from one of the country's leading Republican lawmakers.

House Speaker John Boehner called on President Barack Obama to show what he described as real leadership, saying it is “not enough to wish or to wait for a solution.”

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.

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.

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 manages to gain approval in the Senate.

White House officials say the president remains hopeful there is still time 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 separate 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.

Despite the apparent lack of progress in debt reduction talks, there is growing consensus that the country must raise its borrowing limit and make sure the government does not run out of money.

House Speaker Boehner told reporters Thursday defaulting is 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. And White House spokesman Jay Carney warned the world is watching, and that even the threat of a default is harmful to Washington's reputation and the U.S. economy.