U.S. lawmakers and the president appeared no closer to a deal Friday to raise the country's 14.3 trillion borrowing limit and slash spending ahead of an August 2 deadline.
Democrats in the Senate Friday blocked a Republican-backed plan from the House of Representatives that would raise the debt ceiling in exchange for large cuts in the federal budget.
The so-called “Cut, Cap and Balance Act” also would have required Congress to approve a constitutional amendment for a balanced federal budget.
Senate Majority Leader Harry Reid called the plan “weak and senseless,” and President Barack Obama had promised to veto the measure.
Republicans in the House of Representatives chastised the Democratic-controlled Senate, accusing senators of failing to produce results for the American people.
House Speaker John Boehner told reporters he and President Obama are not close to reaching an agreement that would raise the debt ceiling while cutting trillions of dollars in debt over the next decade.
Mr. Obama has repeated expressed hope this week that the sides could reach what he has called a “grand bargain.” Mr. Obama is holding a question-and-answer session Friday with students at the University of Maryland to discuss his views on the economy, including his talks with Republican leaders on increasing the borrowing limit and reducing the nation's massive debt.
Talks have stalled this week over stark disagreements over 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.
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.
