WASHINGTON (AFP) – US President Barack Obama warned Friday that polarized lawmakers were "almost out of time" to forge a deal averting a disastrous debt default that could send shockwaves though the world economy.
Casting himself as above the angry fray in Congress, Obama urged a compromise blending rival approaches in the Democratic-held Senate and Republican-led House of Representatives for raising the $14.3 trillion debt ceiling.
"There are plenty of ways out of this mess. But we are almost out of time. We need to reach a compromise by Tuesday so that our country will have the ability to pay its bills on time, as we always have," he said.
With global markets rattled by the see-saw political battle in Washington, White House spokesman Jay Carney told reporters the fragile US economy "has suffered because of the uncertainty" and warned "some damage has been done."
Lawmakers still warred over how much to raise the limit, with Republican House Speaker John Boehner pushing for a short-term increase that would set the stage for another high-stakes showdown over spending in a few months.
"We just can't do that," said Democratic Senate Majority Leader Harry Reid, whose plan would spare Obama another politically fraught debt battle before the November 2012 elections. "We cannot be in this battle all the time."
After two embarrassing abortive efforts, Boehner was to bring his plan for a vote in the House, having again re-written his bill in a bid to satisfy the most conservative members in his restless majority in the face of lockstep opposition from House Democrats.
Senate Democrats warned the measure was dead on arrival in the upper chamber even as Reid took steps setting up procedural votes on his plan by 1:00 am (0500 GMT) Sunday and 7:30 am Monday with a final vote sometime on D-Day, Tuesday.
That would leave it up to the divided House to take the final step, a down-to-the-wire endgame with unprecedented financial stakes as the US economy still struggled to recover from the global meltdown of 2008.
Obama insisted both sides were "in rough agreement" on how much spending can be cut "responsibly," and on the steps to take in the coming months on tax reforms as well as some kind of enforcement mechanism.
But when a well-wisher at the White House told Obama that he owed him a poker game, the president responded: "I got some high stakes poker going on right now."
Chinese media attacked the United States over the debt wrangling, warning it could plunge the world into another recession.
China is the top foreign holder of US debt with holdings at $1.16 trillion in May, according to US data, and has raised concerns about its investments.
Raising the debt ceiling could hurt the US dollar and trigger a "torrential flood" of liquidity into the global economy, fueling inflation in emerging economies such as China, the Communist Party mouthpiece People's Daily said.
China's official Xinhua news agency also accused US lawmakers of being "dangerously irresponsible" and warned they risked "strangling the still fragile economic recovery."
But in more bad news for the US economy, struggling to recover from the 2008 financial crisis, government data released Friday showed economic growth had nearly stalled in the first half.
The US economy grew at a dead-pace 0.4 percent in the first quarter and only 1.3 percent in the second quarter of 2011, the Commerce Department said.
Markets around the world remained on edge as Asian stocks fell amid fears that US lawmakers will not break the deadlock.
The Dow Jones Industrial Average plunged 99.07 points (0.81 percent) to 12,141.04 in the first half-hour of trading.
European stocks markets also slid as the US debt crisis deepened, with London's FTSE 100 index of top shares dropping 0.59 percent to 5,838.65 points and Frankfurt's DAX 30 shedding 0.80 percent to 7,132.45 points.
The US economy hit its debt ceiling on May 16 but has used spending and accounting adjustments, as well as higher-than-expected tax receipts, to continue operating normally.
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