IMF Urges Swift Action on US Debt Dispute

Posted July 25th, 2011 at 4:00 pm (UTC-5)
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As U.S. lawmakers and President Barack Obama haggle over plans to cut Washington's massive debt, the International Monetary Fund says the United States must take urgent and effective action on the issue.

Monday, the newest IMF report on the U.S. economy said it is critical to the U.S. and other economies for Washington to promptly raise the legal limit on debt, while gradually cutting spending.

Leaders of the U.S. Senate and House of Representatives are working on competing plans to raise the federal debt limit and trim budget deficits. Congress and the White House failed to reach a bipartisan agreement Sunday, prompting declines on many stock markets Monday. Gold prices also hit a record high.

Senate majority leader Harry Reid has drafted a plan that includes $2.7 trillion in cuts and would raise the debt ceiling through next year's election. The plan has been endorsed by the White House. Spokesman Jay Carney called it a reasonable approach and noted that all the cuts in the proposal have been previously agreed to by both parties.

The Speaker of the House, Republican John Boehner, has called on members of his party to support a short-term extension of the debt ceiling accompanied by a package of spending cuts. Boehner earlier said he was not sure a bipartisan deal could be reached.

August 2 is the deadline for raising the debt ceiling and allowing the federal government to continue to borrow money. The Obama administration and congressional leaders had hoped to announce a framework for an agreement before Asian financial markets opened Monday.