Obama, Lawmakers Continue Debate on Debt Deal

Posted July 22nd, 2011 at 12:25 pm (UTC-5)
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Efforts continued in Washington Friday to forge a political agreement to prevent the United States government from running out of money before an August 2 deadline, while also slashing spending.

Democrats in the Senate blocked a Republican-backed plan from the House of Representatives to raise the debt ceiling in exchange for large cuts in federal spending. At the same time, top lawmakers traded barbs over who was to blame. U.S. President Barack Obama warned “everyone will suffer” if a deal does not get done.

Mr. Obama told a town hall meeting with students at the University of Maryland the only fair way to solve the nation's spending problems is with a combination of spending cuts and increased tax revenue.

He said the only people who do not agree are some members of the House of Representatives.

Earlier Friday, House Speaker John Boehner blamed Democrats for the impasse, telling reporters Republicans in the House had done their job. He also said he and the White House were “not close to an agreement.”

Boehner's comment came as the Democrat-led Senate voted to block debate on the so-called “Cut, Cap and Balance Act.”

In addition to slashing spending, the bill would have required Congress to approve a constitutional amendment for a balanced federal budget.

After the vote, Senate Majority Leader Harry Reid said the Senate would not meet again until Monday since there was no more legislation to consider.

President Obama has repeatedly expressed hope this week that the sides could reach what he has called a “grand bargain.” Talks have stalled this week over stark disagreements on the need for tax hikes and severe funding cuts to social safety net programs.

Despite the contentious talks, White House spokesman Jay Carney said the administration is “absolutely confident” Congress will move to raise the nation's borrowing limit by the August 2 deadline, when the government runs out of money to pay its obligations.

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