Obama piles on pressure for ‘11th-hour’ debt deal

US President Barack Obama urged polarised lawmakers to find an “11th-hour” deal to avert a calamitous August debt default, but said he saw progress as he praised a new bipartisan plan.

The US leader warned that time was running out to forge a broad deficit-cutting compromise amid dragging talks with Democratic and Republican leaders of the Senate and House of Representatives on raising the US debt ceiling.

“The problem we have now is, we’re in the 11th hour, and we don’t have a lot more time left,” he said in a hastily arranged White House appearance.

Washington 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 until August 2. Finance and business leaders have warned failure to raise the US debt ceiling by then could send shock waves through a world economy still reeling from the 2008 collapse, while Obama has predicted economic “Armageddon”.

Very public differences remain as, in a largely symbolic move, the House voted 234-190 late Tuesday to approve a contentious Republican plan –backed by allies of the archconservative “Tea Party” movement – to require drastic spending cuts in return for raising the debt limit.

It also ties any increase in the debt ceiling to securing the two-thirds majorities needed in each chamber to send an amendment to the US Constitution requiring a balanced federal budget to the states for ratification.

Obama noted that the so-called “Cut, Cap, and Balance” plan was dead on arrival in the Democratic-held Senate and that he would veto it, making it a political gesture to appeal to conservatives. Instead Obama highlighted a new plan by a bipartisan “Gang of Six” senators that aims to slash the swollen US budget deficit by some $3.7 trillion over 10 years and boost revenues $1 trillion by closing tax loopholes and ending some tax breaks.

The president called the framework “broadly consistent” with his call to cut spending including on the US military, overhaul cherished social safety net programmes, and raise taxes on the rich to ensure “shared sacrifice”.

Obama had said he would call top congressional leaders after the House vote to set up a new round of negotiations, but there was no confirmation from the White House or congressional sources of any planned new talks.

The president however expressed hope for a breakthrough “in these next couple of days.”

“We don’t have any more time to engage in symbolic gestures, we don’t have any more time to posture; it’s time to get down to the business of actually solving this problem,” he warned.

And Obama hedged heavily against the notion that the “Gang of Six” proposal, which faced high congressional hurdles, offered a clear and easy path through angry partisan politics to reach a deal.

“Just because we might agree in principle with a range of issues with six senators, or seven senators, that doesn’t get us out of the House of Representatives, that doesn’t get us out of the Senate,” he said.

US stocks closed sharply higher with a boost from Obama’s announcement. The Dow Jones Industrial Average gained 1.6 percent helped by strong company results but also nudged by signs a debt deal might be near.

Stocks mostly rose in Asia on Wednesday as well, with Tokyo closing 1.17 percent higher, Seoul rising by a similar rate, and Sydney ending the day up 1.83 percent.

European markets also climbed at the start of trade yesterday.