US lawmakers hunt for debt deal as deadline looms (AFP)

WASHINGTON (AFP) – Three days before a critical deadline, US President Barack Obama pressed polarized lawmakers Saturday to reach an urgent deal to avert a US debt default that could plunge the world economy into chaos.

With cash-strapped Washington facing a midnight Tuesday deadline when it runs out of cash to pay its bills, Obama said in his weekly address that "there are plenty of ways out of this mess. But there is very little time."

Obama noted that a stalemate could lead ratings agencies to downgrade the sterling US debt rating of Triple-A, causing a spike in interest rates that would throw a wrench into the gears of the already sputtering US economy.

"That would be inexcusable, and entirely self-inflicted by Washington. The power to solve this is in our hands," he said, as senators made a beat-the-clock push to hack a path to compromise through a jungle of partisan politics.

Number-two Senate Republican Jon Kyl accused Obama's Democrats of being unserious about making deep spending cuts and warned that the United States could soon face a Greece-style "debt crisis" of its own.

"With debt crises rolling across Europe, we know it is only a matter of time before people start to question whether America can sustain its huge and growing debt," he said in the weekly Republican rejoinder to Obama.

The rival appeals with the Republican-led House of Representatives due to kill a proposal from Democratic Senate Majority Leader Harry Reid, a tit-for-tat strike after the Senate beat back a House-passed Republican bill late Friday.

The Democratic-held Senate, meanwhile, was on course for a 1:00 am (0500 GMT) Sunday procedural vote on Reid's proposal to end the angry stalemate.

Behind closed doors, lawmakers tussled over the contours of a compromise expected to call for spending cuts roughly equal to Obama's request for a $2.4 debt limit increase, no tax hikes, and the creation of a special committee of lawmakers tasked with finding savings in the social safety net.

The US economy hit its $14.3 trillion debt ceiling on May 16 and has used spending and accounting adjustments, as well as higher-than-expected tax receipts, to continue operating normally -- but can only do so through Tuesday.

Business and finance leaders have warned that default would send crippling aftershocks through the fragile US economy, still wrestling with stubbornly high unemployment of 9.2 percent in the wake of the 2008 global meltdown.

Absent a deal, the US government will have to cut an estimated 40 cents out of every dollar it spends, forcing grim choices between paying its debt or cutting back on programs like those that help the poor, disabled, and elderly.

In a grim warning of what may come if there is no breakthrough by Tuesday, US markets fell for a fifth straight day on Friday -- a month of gains wiped out in a week of losses due to poor US growth and the political stalemate.

The House late Friday passed Speaker John Boehner's bill to avert a default, with 22 Republicans joining all 188 Democrats who voted in opposition to the plan, while 218 Republicans backed it -- eking out the 216 votes needed.

Within two hours, the Senate had rejected it in a 59-41 vote, with all of the White House's allies voting against the plan, joined by six Republicans who rejected it as insufficiently stringent.

Reid said he hoped Republican Senate Minority Leader Mitch McConnell would now help work out a final deal.

A key sticking point was the duration of any debt limit increase: Boehner's plan set the stage for another high-stakes showdown in a few months, while Reid's approach met Obama's goal of putting off another politically fraught debt battle until after the November 2012 elections in which he seeks a second term.

Boehner's bill had sought to pair raising the debt ceiling by $900 billion with spending cuts of some $917 billion over 10 years, while requiring later debt limit increases to be tied to congressional passage of a balanced budget amendment to the US Constitution for ratification by the 50 states.

Reid, whose Democrats oppose tying the debt limit to such an amendment, has offered a blueprint that would raise the debt ceiling by $2.4 trillion while cutting spending by some $2.4 trillion over 10 years.

And he grafted onto his bill a two-week-old "backup plan" mechanism by McConnell that would effectively allow Obama to raise the debt limit by that amount in three steps with only Democratic votes.

Neel Kashkari, who served as an assistant Treasury secretary during the George W. Bush administration and managed the fallout from the 2008 collapse of investment giant Lehman Brothers, said the global economic context in September 2008 was probably worse than today, but the US economy remains vulnerable.

"These factors suggest that a US downgrade has the potential to be as bad or perhaps worse than the Lehman shock," Kashkari wrote in The Washington Post.

View the original article here

Big teams, big names coming up at trade deadline (AP)

The Major League Baseball trade deadline is fast approaching, and plenty of big names already are on the move.

Carlos Beltran is headed to San Francisco, bolstering the reigning world champions for another run at the title and Colby Rasmus is out of Tony La Russa's dog house in St. Louis and on his way to Toronto.

With the deadline looming Sunday, there are still a lot of big decisions to be made and big stars who could be getting changes of scenery.

The New York Yankees are in second place in the AL East, three games behind Boston, which almost assuredly means they will be active. The Yankees could be in the market for a quality starter with Phil Hughes struggling and a left-handed reliever to help them chase down the Red Sox.

"If we make moves, we feel that it's to better the club and I can't tell you that we're going to make any moves," Yankees manager Joe Girardi said. "Our club has got to where we are with the pieces we have and we've done a good job. Will we tweak it? I don't know. Past history has shown the Yankees have done everything they can to tweak the club to make it better."

Other teams in baseball's upper echelon like the Red Sox and Phillies will likely be active in the trade market.

Several other teams in limbo have difficult decisions to make. The Minnesota Twins are six games behind the Detroit Tigers in the AL Central. They have a history of late-season surges, but must make a decision soon if they are going to be buyers or sellers this time around.

The Cleveland Indians are in a similar boat. One of the biggest surprises in baseball this season, the Indians trail the Tigers by just two games. They were looking for current help in the outfield with Grady Sizemore and Shin-Soo Choo on the disabled list, but didn't want to give up any of their prized young prospects like infielders Jason Kipnis or Lonnie Chisenhall to do it.

Manager Manny Acta said recently that it would be "an understatement" to say the team needs some help down the stretch, and the Indians made a move on Thursday by adding Cubs outfielder Kosuke Fukudome for a pair of minor league players.

And what about the Cincinnati Reds? They're five games behind the Cardinals in the NL Central — and St. Louis just picked up right-hander Edwin Jackson, too — but some help in the rotation or the outfield could put them right back in the picture.

"We're still buying. ... We've got a lot of things cooking, but nothing close," Reds GM Walt Jocketty said Wednesday.

The Texas Rangers saw what a big deal can do last year when they got Cliff Lee from Seattle and rode him to the World Series.

Here's a quick-hit look at some of the moves that could be made this year to try to accomplish the same goal.

PLAYERS ON THE MARKET:

_Ubaldo Jimenez, RHP, Colorado Rockies: 27-year-old Dominican is 6-9 with a 4.20 ERA, a down year after last year's brilliant effort (19-8, 2.88). But his strikeout numbers are still overpowering and he has a very manageable contract, making him an attractive target. Good fits? Yankees, Reds.

_Heath Bell, RHP, San Diego Padres: Burly All-Star is one of the most proven closers available. His strikeout numbers (6.8 per nine innings) are down from the last two years, but he's still getting the job done with 29 saves. Good fits? Rangers, Angels, Cardinals.

_Hunter Pence, RF, Houston Astros: One of the few bright spots for the lowly Astros this year. Hitting .307 with 11 HRs, 62 RBIs and 24 2Bs. But Houston has been out of race almost since season started and could be looking to sell. Again. Good fits? Braves, Phillies.

_B.J. Upton, CF, Tampa Bay Rays: With Rays languishing in a distant third place in the AL East, could look to cut ties with the 2nd overall pick in the 2002 draft. Upton has 15 HRs and 53 RBIs, but is hitting just .227 and could benefit from a change of scenery. Good fits? Nationals, Tigers.

"I grew up through the minor leagues with a lot of these guys here, so I love being here, I love playing here," Upton said. "Let's hope for the best."

TEAMS TO WATCH:

_Texas Rangers: New ownership has been ultra-aggressive in bringing in talent. Reportedly went hard after Beltran and getting a closer to help Neftali Feliz — his five blown saves are third-most in AL — is a big priority. "I just don't see urgency," manager Ron Washington said of Feliz. "I don't see it."

_Philadelphia Phillies: Those Four Aces could use some run support. Phillies have the best record in the majors, but are 18th in team batting average and 13th in runs scored this year. At corner OF spots, Raul Ibanez and Domonic Brown have struggled sometimes. Pence and White Sox OF Carlos Quentin are two hot names right now.

_Minnesota Twins: GM Bill Smith has been trying to wait as long as possible to decide if his team is a buyer or seller in the weak AL Central. If they buy, Twins need major help in bullpen and rotation. If they sell in an effort to restock a thin farm system, OFs Jason Kubel, Delmon Young and Michael Cuddyer, DH Jim Thome and LHP Francisco Liriano all could come available for the right price to impact a pennant race near you.

_Seattle Mariners: GMs around the country are licking their chops and hoping they finally get word that LHP Felix Hernandez is on the market. M's steadfastly maintain they're holding on to King Felix and All-Star closer Brandon League, but you never know.

___

AP Baseball Writers Joe Kay in Cincinnati and Fred Goodall in Tampa, Fla., and Sports Writers Howie Rumberg in New York and Dan Gelston in Philadelphia contributed to this report.

View the original article here

Rival debt plans pushed as deadline looms (Reuters)

WASHINGTON (Reuters) – Lawmakers were locked in a standoff on Monday over dueling debt plans that offered little prospect for compromise, increasing the threat of a ratings downgrade and national default that could sow chaos in global markets.

Little more than a week before the August 2 deadline to raise the $14.3 trillion debt ceiling, President Barack Obama's Democrats and their Republican rivals pursued separate budget proposals in Congress, with no clear path to bring them together.

The impasse rattled investors worldwide, sending stocks and the dollar down and pushing gold to a record high, but falling far short of the panicky sell-off that some politicians in Washington had feared after weekend talks broke down.

Details emerged of the House of Representatives Republicans' two-stage deficit reduction plan that would start with an initial $1.2 trillion in savings over 10 years. It is sure to be rejected by Obama because it would raise the U.S. debt limit for only a few months, meaning the issue likely would have to be revisited early next year.

Meanwhile, congressional Democrats detailed their competing plan for $2.7 trillion in deficit reduction over the next decade but with a debt limit increase that would carry through the November 2012 presidential and congressional elections. Republicans appear unlikely to support this approach.

Republicans control the House and Democrats control the Senate.

Market players warned of a damaging downgrade of the United States' gold-plated AAA rating if the stalemate goes down to the wire.

Neither plan being discussed by lawmakers may be enough to avert a downgrade by ratings agency S&P, which has indicated it wants to see a $4 trillion deficit reduction plan over 10 years. The risk of a lower U.S. credit rating has become the markets' main worry.

Joining a growing chorus of global concern as the world's largest economy showed signs of legislative dysfunction, the International Monetary Fund urged swift U.S. action on its debt to avert broad negative fallout.

Obama and congressional leaders have tried to reassure global markets that the country will be able to service its debt and meet other obligations after August 2, when the United States will run out of money to pay all of its bills.

Ratings agencies have warned that even if Congress raises the debt ceiling and averts a default, they may still strip the United States of its Triple-A credit rating if lawmakers fail to agree on deeper long-term budget cuts.

Republican House Speaker John Boehner's plan would raise the debt limit in stages, forcing Congress to confront the politically painful issue again before the November 2012 election, when Obama is seeking a second term.

Boehner will push for legislation to cut $1.2 trillion in spending over 10 years and provide a short-term, $1 trillion increase in the government's borrowing limit but include no tax increases. Obama has said he opposes a short-term debt limit hike and instead wants about $2.4 trillion in new borrowing authority, which would extend through 2012.

Senate Majority Leader Harry Reid, a Democrat, laid out a $2.7 trillion spending-cut plan that includes large savings from domestic and defense programs to try to break the impasse and would provide enough borrowing authority to meet needs through 2012.

It would include $1.2 trillion in savings that Democrats say Republicans already had agreed to.

"The Republicans are more interested in embarrassing the president than doing what is right for the country," Reid told reporters. "We should not let these extremists dictate the outcome of this debate or the direction of our country. The time for ideological extremism should end."

(Additional reporting by Richard Cowan, Caren Bohan, Alister Bull, Laura MacInnis and Deborah Charles in Washington, Ryan Vlastelica in New York, Emily Kaiser in Singapore, Yoo Choonsik in Seoul; Editing by Will Dunham)

View the original article here

Debt talks get messy as deadline looms (Reuters)

WASHINGTON (Reuters) – Facing a looming deadline to avoid a default, Republican and Democratic lawmakers on Wednesday worked to combine elements of a plan to raise the debt ceiling with market-pleasing proposals to cut spending.

An ambitious new deficit reduction plan, unveiled on Tuesday by a group of senators known as the "Gang of Six," offers a ray of hope in an increasingly grim standoff that has threatened the United States' top-notch credit rating.

Congress must approve an increase in the $14.3 trillion U.S. debt ceiling by August 2 or the government will run out of money to pay its bills. Republicans and Democrats agree that spending cuts should accompany a debt-limit increase to tame mounting debt but have been unable to agree on the details.

White House talks on a comprehensive deficit-reduction deal stalled over tax increases, which Republicans still rule out.

President Barack Obama will meet with the Democratic leadership of the Senate and the House of Representatives at 2:50 p.m. EDT (1850 GMT) on Wednesday to discuss progress on the debt negotiations, the White House said.

Lawmakers have been scrambling to find a solution, and there is no single plan. The best option remains the one first billed as a backup, which passes responsibility, authority and potentially blame for raising the debt ceiling to Obama.

That might not be enough for Wall Street. The stalemate on debt talks has shaken global markets, and credit rating agencies have said that even if lawmakers raise the debt limit in time, America's top-notch triple-A credit rating will still be under pressure without a broad deficit-reduction plan.

Congressional leaders are looking to the Gang of Six plan for a way out of the impasse. A more modest proposal may be needed to avert default by August 2, but the $3.75 trillion Gang of Six plan could help lawmakers reach a broader deal shortly after that to address long-term fiscal problems and alleviate credit raters' concerns.

Initial reaction was positive. Obama seized on the plan as a "very significant step" on Tuesday and urged congressional leaders to start discussing it. Senators from both parties embraced it while Republican leaders in the House said it contained some good elements.

Investors welcomed the plan on Tuesday, driving up the price of 30-year Treasury bonds sharply and pushing global stocks higher. But on Wednesday, bond prices eased as Wall Street realized the road ahead remains long.

"We think that an agreement will be made, with a smaller package tied to an extension (of the debt limit) to the end of 2011 or even 2012, leaving the difficult decisions on entitlement reform or tax increases postponed to later in the year or more likely after the November 2012 election," said Carl Leahey, senior economist at Decision Economics.

An analyst from Fitch Ratings said it was encouraging that progress appeared to be being made on a substantial U.S. deficit-reduction deal and said the credibility of the bipartisan plan was as important as the overall savings amount.

(Additional reporting by Thomas Ferraro and Alister Bull; Writing by Deborah Charles; Editing by Will Dunham and Eric Beech)

View the original article here

NFL players say they're not tied to deal deadline (AP)

By HOWARD FENDRICH and BARRY WILNER, AP Pro Football Writers Howard Fendrich And Barry Wilner, Ap Pro Football Writers – 1?hr?38?mins?ago

WASHINGTON – Cautioning not to assume the lockout will be over by the weekend, NFL Players Association president Kevin Mawae said his group is "not tied" to a deadline for getting a deal done in the next 24 hours.

"We want to go back to work," Mawae said Wednesday outside NFLPA headquarters, "but we will not agree to a deal unless it's the best deal for the players."

If the four-month lockout — the NFL's first work stoppage since 1987 — is going to end in time to keep the preseason completely intact, the players and owners almost certainly must ratify the deal by Thursday. The St. Louis Rams and Chicago Bears are scheduled to open the preseason Aug. 7 in the Hall of Fame game.

The NFLPA's executive committee and representatives of all 32 teams were meeting in Washington, prepared to review and vote on a full agreement — if they received it later Wednesday. Members of the NFL's labor committee were meeting in Atlanta on Wednesday, so they could decide whether to recommend a finalized proposal to all club owners.

The owners then would vote Thursday; at least 24 would need to OK the deal. If it's passed by both sides, team executives would be schooled Thursday and Friday in Atlanta in the guidelines and how to apply them; topics would include the 2011 NFL calendar, rookie salary system and new free agency rules.

"Our goal today is to see what is on the table and discuss outlying issues," Mawae said. "The players are not tied to a July 21 timeline. Our timeline is that which gives us the best deal for the players — today, tomorrow or whatever it might be."

Two people familiar with the negotiations told The Associated Press that players and owners were expected to review a potential agreement by midday Wednesday. Another person, however, said there still were issues to be resolved.

All three people spoke to the AP on condition of anonymity because the process was supposed to remain confidential.

The NFLPA's executive committee reviewed only portions of a potential agreement Tuesday, with not enough information to warrant a vote yet.

There still were unresolved issues Tuesday, including what it would take to get the 10 plaintiffs — including quarterbacks Tom Brady, Peyton Manning and Drew Brees, Chargers receiver Vincent Jackson and Patriots guard Logan Mankins — to sign off on a settlement to their antitrust lawsuit against the NFL that is pending in federal court in Minnesota.

Late Tuesday, Jackson tweeted: "I have made no demands, I wanna play ball like the rest of my peers!"

"Obviously, there's the litigation with the named plaintiffs, and I am not familiar with the whole legal part of it. ... But at the end of the day," Mawae said, "the deal we are working on is the deal that's best for all the players in the NFL, and not just four guys."

Another pending dispute has been the TV networks case, in which players accused owners of setting up $4 billion in "lockout insurance."

The country's most popular professional sports league has been in limbo since the old collective bargaining agreement expired March 11. The lockout began hours later. The regular-season opener is scheduled for Sept. 8, when the Super Bowl champion Green Bay Packers are to host the New Orleans Saints.

___

Follow Howard Fendrich at http://twitter.com/HowardFendrich

View the original article here

Lawmakers work on debt Plan B as deadline looms (Reuters)

WASHINGTON (Reuters) – With five days to go before President Barack Obama's deadline for a debt ceiling deal and no agreement in sight, Republicans and Democrats on Monday were crafting a fallback plan to avert a default.

Both parties agree on the need to raise the debt ceiling, which caps how much the United States can borrow, but are deeply divided along ideological lines over how to do it.

Treasury Secretary Timothy Geithner, however, remained optimistic that a deal was possible.

"Despite what you hear, people are moving closer together," Geithner, who met with top House of Representatives Republicans on Friday, told CNBC television. "You have seen the leadership of the Republican Party ... take default off the table. That's encouraging."

But the stalemate in Washington, along with debt problems in Europe, is unnerving financial markets worldwide amid fears that they could spiral into a global crisis. World stocks dipped and gold prices hit record highs above $1,600 an ounce as nervous investors sought a safe haven.

"There's a perfect storm happening on a global macroeconomic basis with no debt deal here and the ongoing issues in Europe, and the market is looking at all these things and is fairly anxious," said Oliver Pursche, president of Gary Goldberg Financial Services in Suffern, New York.

The top Republican in the Senate, Mitch McConnell, has submitted a plan that would essentially give Obama the power to raise the debt limit and take the political heat off Republicans. Senate leader Harry Reid hopes to begin debate on a modified version in the Democratic-led Senate this week.

McConnell's complicated plan to increase the debt limit in three stages has moved to the forefront as efforts to reach a comprehensive deficit-reduction deal have hit a wall.

Democrats and Republicans -- with an eye on 2012 elections -- are digging deeper into entrenched positions on taxes and entitlement programs such as Social Security and the Medicare healthcare program for the elderly.

Democrats want tax increases to be part of any final deficit reduction deal. Republicans say that would hurt a sputtering economic recovery and have taken aim at entitlement programs that Democrats have vowed to protect.

McConnell's plan, initially presented last week as a fallback option, is gaining traction as a viable solution in part because it would allow Republicans to avoid having to take a politically toxic vote on raising the debt limit.

Democratic aides said Reid and McConnell's staff were still trying to work out details of the plan, including spending cuts of about $1.5 trillion.

"The plan is still tenuous. We don't have the details yet. Everything is extremely fluid," a Democratic aide said.

The Senate, where Democrats have a majority, is expected to approve the final fallback plan but it is uncertain if the Republican-led House will go along.

"We (the Senate) are going to throw it to them (House Republicans) and see what happens," a Democratic aide said.

Democratic aides note that last week House Speaker John Boehner, the top U.S. Republican, declined to rule the McConnell plan in or out.

JULY 22

Obama had set a Friday deadline for Congressional leaders from both parties to agree on a deal to raise the country's debt ceiling. He said the July 22 deadline would give Congress enough leeway to write and pass legislation before August 2, when the government will run out of money to pay its bills.

Failure to increase the debt ceiling by then could send shockwaves through global financial markets and plunge the United States into another recession.

Credit rating agencies have signaled they may cut the top-notch AAA U.S. rating if the borrowing limit is not raised and deficit reduction measures are not laid out.

Fitch Ratings said on Monday if the debt ceiling is not raised before August 2 it would place the AAA rating on "watch negative," which means it could downgrade it within a three-to-six-month period. This echoed similar warnings from the other two big rating agencies, Moody's and S&P, last week.

Obama held White House talks with congressional leaders for five straight days last week. But no White House talks were listed on Obama's official schedule for Monday.

Senior Democratic aides said the Senate will likely begin considering the McConnell-initiated measure after "show votes" on a Republican balanced budget amendment as well as a Republican "cut, cap and balance" bill.

Boehner has scheduled a vote for Tuesday on his "cut, cap and balance" plan, which would condition an increase in the debt limit on passage of a constitutional amendment to require the federal government to balance its books each year.

That bill stands little chance of passing the Senate but it might buy some goodwill with conservatives to eventually allow for passage of a compromise, such as the McConnell plan.

"If by Friday there is no meaningful agreement on Plan B and the parties remain far apart, the greenback could see panic selling as fears of possible technical default grip the market," said Boris Schlossberg, director of currency research at GFT in New York.

(Additional reporting by Rachelle Younglai, Andy Sullivan and Caren Bohan in Washington and Wanfeng Zhou in New York; Editing by Ross Colvin and Bill Trott)

View the original article here

Lawmakers snipe, Bernanke warns as deadline nears (AP)

By JIM KUHNHENN and NANCY BENAC, Associated Press Jim Kuhnhenn And Nancy Benac, Associated Press – 30?mins?ago

WASHINGTON – Fuming lawmakers pointed fingers at one another and President Barack Obama on Thursday as negotiations over raising the national debt limit entered a perilous endgame. Federal Reserve Chairman Ben Bernanke warned of economic damage, and an anxious Wall Street envisioned catastrophe if the U.S. defaulted on its obligations.

Obama and congressional leaders were meeting again late in the day at the White House. But the president's blunt declaration that "enough is enough" as the previous evening's talks ended did nothing to quell the rancor as a new day of positioning and posturing played out.

Senate Majority Leader Harry Reid stood on the Senate floor Thursday and sniped that House Majority Leader Eric Cantor shouldn't even be part of the talks anymore, noting that the Virginia Republican has been called "childish." Not long after, Senate Republican Leader Mitch McConnell stood to serve notice that the debt problem belonged squarely in Obama's lap.

"Republicans will not be reduced to being the tax collectors for the Obama economy," McConnell said. "Don't expect any more cover from Republicans on it than you got on health care. None."

Federal Reserve Chairman Ben Bernanke, testifying on Capitol Hill, warned legislators that failing to raise the debt limit in time to avoid default would only end up increasing the federal deficit, calling that a "self-inflicted" wound.

He said default would drive up interest costs on the $14.3 trillion debt and reduce government revenues by slowing economic growth.

None of the back-and-forth was a promising prelude to negotiations scheduled to resume at the White House, less than three weeks before an Aug. 2 deadline for increasing the government's borrowing authority. Thursday's talks were to focus on the touchy matters of how to cut spending on Medicare and Medicaid and raise more tax revenue.

Behind the scenes, meanwhile, legislators and White House officials continued to work on a backup plan offered by McConnell.

Obama is demanding that budget negotiators find common ground by week's end, as the financial world watches with growing jitters.

"No one can tell me with certainty that a U.S. default wouldn't cause catastrophe and wouldn't severely damage the U.S. or global economy," Jamie Dimon, CEO of JPMorgan Chase & Co., told reporters Thursday. "And it would be irresponsible to take that chance."

Already, Moody's Investors Service is reviewing the government's credit rating, saying there is a small but rising risk that it will default on its debt. If Moody's were to lower the rating, the consequences could ripple through the economy, pushing up rates for mortgages, car loans and other debts. A Chinese rating agency, Dagong Global Credit Rating Co., also warned of a possible downgrade.

Reid sketched the potential consequences of default in dire terms, saying Social Security checks, veterans' benefits and paychecks for troops would stop. "Millions of Americans could lose their jobs," he added.

A Reid spokesman later clarified that Social Security benefits "could" stop, as Obama previously had warned, but it wouldn't be a certainty.

Republicans have called such statements scare tactics.

In the cauldron of the White House Cabinet Room, Obama and top lawmakers bargained for nearly two hours late Wednesday. Obama curtly ended the session when Cantor, R-Va., urged him to accept a short, monthslong increase in debt instead of one that would last through next year's presidential election.

"Enough is enough. ... I'll see you all tomorrow," Obama said, rising from the negotiating table and leaving the room, according to several officials familiar with the session.

Reid said that while other Republican leaders were willing to negotiate in good faith, Cantor "has shown he shouldn't even be at the table."

The United States hit its current $14.3 trillion debt ceiling in May and the Obama administration says the government will default on its obligations if the debt limit is not increased by Aug. 2. For a new debt ceiling to last to the end of 2012 would require raising it by about $2.4 trillion.

Republicans, in control of the House of Representatives in part because of the support of tea party activists, say they will not vote to raise the limit if Obama doesn't agree to at least an equal amount of deficit reductions over 10 years.

Obama and the top eight House and Senate leaders met for the fourth time in as many days Wednesday, and, despite the tense ending, agreed to meet again Thursday.

A congressional aide said the White House discussed with lawmakers the possibility of moving talks this weekend to the presidential retreat at Camp David in Maryland. But a spokesman for House Speaker John Boehner said the Ohio Republican told the White House he saw no need for that. And Obama aides later said they planned to continue holding meetings at the White House for the next few days.

Despite McConnell's assertions that the debt problem belongs to Obama, fresh polling from Quinnipiac University suggested voters would be more apt to hold Republicans responsible than Obama, by 48 percent to 34 percent, if the debt limit is not raised. The same survey showed voters were about evenly split on whether they're more concerned about raising the limit and increasing government debt, or seeing the government go into default and damaging the economy.

"The American people aren't very happy about their leaders, but President Barack Obama is viewed as the best of the worst, especially when it comes to the economy," said Peter Brown, assistant director of Quinnipiac's Polling Institute.

That helps explain why McConnell put forward a plan that would give Obama new powers to overcome Republican opposition to raising the debt ceiling.

The proposal would place the burden on Obama to win debt ceiling increases up to three times, provided he was able to override congressional vetoes — a threshold Obama could manage to overcome even without a single Republican vote and without massive spending cuts. Conservatives promptly criticized the plan for giving up the leverage to reduce deficits. But the plan raised the prospect of combining it with some of the spending cuts already identified by the White House in order to win support from conservatives in the House.

In an interview with radio talk-show host Laura Ingraham, McConnell described his plan in stark political terms, warning fellow conservatives that failure to raise the debt limit would probably ensure Obama's re-election in 2012. He predicted that a default would allow Obama to argue that Republicans were making the economy worse.

"You know, it's an argument he has a good chance of winning, and all of a sudden we (Republicans) have co-ownership of a bad economy," McConnell said. "That's a very bad positioning going into an election."

Sen. Charles Schumer, D-N.Y., said that while the president and other Democrats would still prefer a larger agreement, McConnell's plan was an acceptable option — especially if some consensus spending cuts were added. He said McConnell and Reid were discussing the idea.

Democratic officials said that even as Obama confronted Cantor and Boehner in Wednesday's meeting, he commended McConnell.

"Sen. McConnell at least has put forth a proposal," a Democratic official quoted the president as saying. "It doesn't reduce the deficit and that's what we have to do. It just deals with the debt limit. Now Sen. McConnell wants me to wear the jacket for that."

The officials said Obama went on to say they all had a responsibility to find a compromise.

____

Associated Press writers Dave Espo, Laurie Kellman, Ben Feller, Julie Pace, Martin Crutsinger and Erica Werner in Washington and Pallavi Gogoi in New York contributed to this report.

View the original article here

Treasury confirms deadline for raising debt limit (AP)

By CHRISTOPHER S. RUGABER, AP Economics Writer Christopher S. Rugaber, Ap Economics Writer – 1?hr?23?mins?ago

WASHINGTON – Congress has one month to raise the nation's borrowing limit or the government will default on its debt, the Treasury Department said Friday.

Treasury officials confirmed the Aug. 2 deadline in a monthly update that assesses the nation's borrowing situation. The United States reached the $14.3 trillion limit in May. Higher revenue and accounting maneuvers have allowed the government to keep paying its bills in the interim.

Treasury Secretary Timothy Geithner urged Congress to raise the limit and "avoid the catastrophic economic and market consequences of a default crisis."

President Barack Obama and Congressional Republicans are engaged in tough negotiations over resolving the issue. Republicans are demanding deep spending cuts as a condition of increasing the limit. But Republicans will not support tax increases, which Democrats say must be part of any deal.

A Democratic official said Thursday that the real deadline for reaching agreement is mid-July. That's because congressional leaders need a week or two to finalize the details and line up votes.

The U.S. government will continue to take in revenue after the Aug. 2 deadline passes. But it won't be enough to meet its obligations. The government borrows 40 cents for every dollar that it spends and that adds up to an average deficit of about $125 billion each month, the Treasury says.

In May, the government took in $175 billion in revenue and spent almost $233 billion.

The government faces several payments in August that will necessitate a higher borrowing limit, Treasury officials say. About $23 billion in Social Security payments must be made on Aug. 3. And a $30 billion interest payment is due Aug. 15.

A default would likely raise interest rates and threaten the economic recovery, analysts say. But some congressional Republicans are skeptical of such scenarios. Administration officials worry that it could take a financial calamity before Congress acts.

The Senate has canceled its planned July Fourth recess and will work on reaching a deal next week. But partisan divisions remain wide.

Obama has said that Republican and Democratic negotiators have found more than $1 trillion in potential spending cuts over the coming decade.

The White House is also proposing about $400 billion in higher tax revenues. Republicans want no tax increases and deeper spending cuts than Democrats have proposed. The overall goal would be to cut at least $2 trillion over 10 years.

An increase in the borrowing limit of about $2.4 trillion would carry the government through the end of 2012. That would enable Congress to avoid another vote on the issue until after the presidential election.

___

AP Writer Alan Fram contributed to this article.

View the original article here