US lawmakers split despite October 17 debt deadline

WASHINGTON DC - The United States is still facing a potentially devastating sovereign debt default, after senators failed to agree on terms to reopen the federal government and raise the country's borrowing limit.

Republicans and Democrats -- at war over the country's finances and ideological direction for more than two weeks -- tried to shed a positive light Sunday on a weekend of talks that despite the threat of global economic censure did not produce a solution.

The Senate convened a rare Sunday session to try and break the budgetary impasse that prompted the government to shut down on October 1, a move that has since damaged domestic confidence and undermined America's reputation as the world's leading economic superpower.

If the US debt ceiling is not raised by October 17, the Treasury would run out of money and could begin defaulting on its obligations for the first time in history, with likely dire consequences for the global economy.

Seeking to avert that outcome, the Democratic leader in the Senate, Harry Reid, talked up the dialogue with Republicans -- represented by top Senator Mitch McConnell -- though nothing concrete was disclosed.

"I'm optimistic about the prospect for a positive conclusion," Reid said.

US Treasury Secretary Jacob Lew has told the International Monetary Fund's policy steering committee that Washington understood its reputation as a safe harbor was at risk.

Stock markets are already factoring in a possible default if no deal is reached between President Barack Obama, his Democratic Party and rival Republicans by Thursday night.

But the threat of a global economic rebuke has so far done little to prompt an agreement.

Polls released during the shutdown have shown Congress's approval rating at record lows, with Republicans blamed most for the political gridlock in Washington.

Both parties in recent days indicated a deal must be done at all costs, despite the bitter bipartisan rancor.

"This is something that's wreaking havoc around the world and will affect economic growth, and I do hope that over the next week we'll reach a conclusion and I think we will," Republican Senator Bob Corker told "Fox News Sunday."

Obama rejected an offer by Republicans in the House of Representatives to lift the debt ceiling for six weeks while negotiations would continue on reopening the government, insisting on a longer-term solution.

Following talks with the top House Democrat, Nancy Pelosi, the president said they were not budging from their position.

Obama and Pelosi "reinforced that there must be a clean debt limit increase that allows us to pay the bills we have incurred and avoid default," the White House said in a statement.

"The House needs to pass the clean continuing resolution to open up the government and end the shutdown that is hurting middle class families and businesses across the country."

Senate leader Reid had on Saturday turned down a second compromise proposal, offered by moderate Republican Senator Susan Collins.

It called for lifting the US debt limit for up to a year, reopening the government and repealing a tax on medical devices under Obama's signature health care law.

But Collins said her proposal could still become the basis of a deal, telling CNN's "State of the Union" she had support from a growing, bipartisan group of senators.

Senator Charles Schumer, a key Democratic power broker, said Reid and McConnell "were not that far apart" Saturday, when they held their first talks of the crisis.

"I'm cautiously hopeful, optimistic, that we can come to an agreement and open up the government and avoid default based on the bipartisan meetings that are going on," Schumer told CBS's "Face the Nation."

Democrats, meanwhile, have added a demand of their own -- that any deal also involve undoing the across-the-board spending cuts known as the sequester that went into effect earlier this year.

Schumer acknowledged it was a "sticking point."

Corker said House Republicans had gone too far in demanding that Obama's signature health care law be defunded, the initial cause of the government shutdown.

But "now the Democrats are on the verge of being one tick too cute," he said, referring to the bid to undo the sequester.

Global pressure for a deal in Washington is mounting.

"The standing of the US economy would, again, be at risk," International Monetary Fund chief Christine Lagarde said on NBC's "Meet the Press," comparing the effects of failing to raise the debt ceiling and reopening the government to the 2008 global financial meltdown.

source: interaksyon.com

Republicans unveil plan to avert US debt default, probably end standoff

WASHINGTON - Republicans in the House of Representatives on Thursday unveiled a plan that would avert a looming US default, in a sign that lawmakers may end a standoff that has rattled financial markets and thrown America's future creditworthiness into question.

Ahead of a meeting with President Barack Obama, it was unclear whether Republicans would be willing to end a government shutdown that took effect on October 1 without concessions that would undermine Obama's signature healthcare law, a stance that precipitated the crisis.

Still, the offer to raise the debt ceiling is a significant shift for Republicans, who had hoped to extract concessions on spending and health care. By extending the government's borrowing authority until possibly the middle or end of November, it would eliminate the near-term threat of a default that would hit everyone from retirees to bondholders.

"It's time for these negotiations and this conversation to begin," House Speaker John Boehner told reporters after presenting the plan to his fellow Republicans.

Obama has already said he is willing to consider a short-term debt ceiling increase as long as it is not tied to other concessions. Obama will take a look at the proposal, a White House official said. But the White House insisted that Republicans also must agree to end a government shutdown that took effect on October 1.

Many rank-and-file Republicans also appeared to be skeptical of the deal when Boehner presented it at a closed-door meeting on Thursday morning, aides said. Boehner's grip over his troops has been tenuous this year and many of the chamber's most conservative lawmakers have defied him repeatedly on other crucial votes.

Still, investors seemed to be heartened by the development. US stocks rallied strongly with major indexes climbing more than 1 percent.

The Treasury Department says it will be unable to pay all of its bills if Congress does not raise the $16.7 trillion debt ceiling by October 17. Republicans say the Obama administration would be able to keep up with its bond payments at the expense of other obligations if that deadline was missed. Treasury Secretary Jack Lew said that's not possible.

"It would be chaos," he told the Senate Finance Committee.

The Republican plan would postpone that day of reckoning by six weeks, which would give them more time to seek spending cuts, a repeal of a medical-device tax, or other measures they say are needed to keep the national debt at a manageable level.

Democrats have called for a debt-ceiling hike that would extend government borrowing authority for more than a year.

The House could vote on the measures as early as Thursday afternoon, though timing remained unclear. House leaders canceled a planned recess and said they would remain in Washington next week to keep working on the problem.

With the October 17 deadline a week away, Obama is scheduled to meet with House Republican leaders on Thursday afternoon. He is also due to meet separately with Senate Democrats and Senate Republicans.

The plan would do nothing to resolve Republican objections to Obama's healthcare reform bill, known as the Affordable Care Act, which prompted the October 1 shutdown.

Hundreds of thousands of federal employees have been out of work since then and individual businesses, from arms makers to motels, have begun to lay off workers as well.

The Labor Department said on Thursday that 15,000 private-sector workers have filed for unemployment benefits due to the shutdown.

House Republicans have passed bills that would reopen portions of the government and otherwise ease the pain of the shutdown, but they still hope to tie a full restoration of government funding to conditions that would undercut "Obamacare," as it is popularly known. (Additional reporting by Jason Lange, Thomas Ferraro, Steve Holland and Roberta Rampton)

source: interaksyon.com