Can US debt deal be struck? Obama is confident
President Barack Obama is confident Democrats and Republicans can cut a "significant deal" to trim the US deficit and increase its borrowing limit to avoid a damaging default, the White House said on Monday.
June 28, 2011 / 10:47 IST
President Barack Obama is confident Democrats and Republicans can cut a "significant deal" to trim the US deficit and increase its borrowing limit to avoid a damaging default, the White House said on Monday.
Despite the White House's optimism, both Republicans and Democrats showed little willingness to compromise after deficit reduction talks led by Vice President Joe Biden collapsed suddenly on Thursday.With polls showing Americans deeply worried about the sputtering economy, both sides are talking tough in an ideological battle over how best to cut a US deficit that is projected to be USD 1.4 trillion this year.Republicans say the solution lies in trillions of dollars in spending cuts, while Obama's fellow Democrats say the deficit cannot be meaningfully reduced without increasing tax revenues, something their opponents reject.Obama, under pressure to forge a budget deal that would pave the way for the USD 14.3 trillion US debt ceiling to be raised by an August 2 deadline, met Democratic Senate leader Harry Reid to talk about the way forward."The president told me that everyone in the room believes a significant deal remains possible," White House spokesman Jay Carney told reporters afterwards.Obama is scheduled to sit down with Senate Republican leader Mitch McConnell at 5 pm (2100 GMT). McConnell has suggested that a short-term measure to raise the debt limit may be necessary, but other Republican leaders insist that a long-term deal needs to be struck._PAGEBREAK_'SACRED COWS'"Democrats and the administration have shown themselves willing to take on tough choices and it is important that Republicans are willing to do the same, take on some of their sacred cows," Carney said.Time is running out ahead of the Aug. 2 deadline, when the U.S. Treasury says it will run out of money to pay the country's bills.Failure to act risks the United States defaulting on its financial obligations, which could push the country back into recession. Carney said that that was not going to happen."The president has said this is essential. Leaders of Congress have said this is essential. We must not default on our obligations. We remain confident that Congress will not let that happen," he said.McConnell has stuck firmly to his party's line that revenue-raising measures were off the table."I intend to ask the president what he's prepared to do, outside of raising taxes, about the massive deficits and debt that have accumulated on his watch," he told the Senate.Obama met with House of Representatives Speaker John Boehner, the top Republican in Congress. The House is not in session this week and many members, including Boehner, are back in their districts.Carney said Obama and Biden would continue to talk to members of Congress to get the debt ceiling lifted but declined to give any specific dates for the next meeting. Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
