White House, lawmakers, close in on debt deal
‘A number of issues yet to be resolved’
With barely two days to act, US President Barack Obama and top lawmakers yesterday closed in on an ambitious deal to avert a disastrous debt default sure to sow chaos in the fragile world economy.
In a partisan vote, the Senate yesterday voted against ending debate on a Bill forwarded by Democratic Senate majority leader Harry Reid which remains in play and which could be used as a vehicle for a compromise.
Mr Reid said a new tentative framework for an agreement would lift the debt limit beyond the November 2012 elections in which President Obama seeks a second term, a key White House demand.
“We are very close,” Republican Senate minority leader Mitch McConnell told CNN amid frantic beat-the-clock talks among the White House, its Democratic allies, and its Republican foes.
Mr Reid was also hopeful yesterday that an 11th-hour breakthrough in the months-long impasse over raising the nation’s $14.3 trillion debt ceiling was in the works.
“We’re cautiously optimistic. There are a number of issues yet to be resolved, and we must understand that there’s no agreement that has been made. We’re optimistic that one can be reached but we’re not there yet,” said Mr Reid.
The US economy hit its debt limit 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 midnight tomorrow.
Business and finance leaders have warned default would send crippling aftershocks through the fragile US economy, still wrestling with stubbornly high unemployment of 9.2 per cent in the wake of the 2008 global meltdown.
Without a deal, the US government would have to cut an estimated 40 cents out of every dollar it spends, forcing grim choices between defaulting or cutting back programmes like those that help the poor, disabled and elderly.
Any compromise would still need to clear the divided Democratic-led Senate and Republican-held House of Representatives, where conservatives close to the “Tea Party” movement have called for draconian belt-tightening.