Both sides 'very close' to agreeing US debt deal
Source: Agencies |
August 1, 2011, Monday
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Print Edition
Print Edition
Lawmakers in the United States were yesterday close to a last-gasp US$3 trillion deal to raise the US borrowing limit and assure financial markets that the US will avoid a potentially catastrophic default.
"We're very close," said Senate Minority Leader Mitch McConnell, the top Senate Republican who is playing a key role in the debt ceiling negotiations.
White House senior adviser David Plouffe said there was general agreement on a deal that would cut the US deficit in two stages. It was first time the White House had acknowledged that both sides were close to a deal.
The first US$1 trillion in cuts have been largely agreed by lawmakers. Under the emerging deal described by congressional aides, a further US$1.8 trillion would be recommended by a special committee appointed by Congress and automatic measures would implement the planned cuts if Congress failed to vote on them.
"It is clear that in the first stage we're going to get ... an extension of the debt ceiling, a first set of spending cuts over US$1 trillion, and then you're going to get this committee that will be charged with reporting out hopefully a balanced deficit reduction," Plouffe said.
An agreement would end weeks of political gridlock that has brought the world's largest economy teetering on the brink of an unprecedented default and close to losing its triple-A credit rating.
Senator Charles Schumer, a Democrat, said: "Default is far less of a possibility now than it was even a day ago because the leaders are talking, and talking in a constructive way."
Politicians were scrambling for a deal to avoid the possibility of market shock today, before tomorrow's deadline when the US loses its borrowing authority.
A US default would plunge financial markets and economies around the globe into turmoil. US stock markets last week posted their worst losses in a year and the dollar slumped.
The emerging deal seemed to answer key demands of both sides. It would have no tax increases as Republicans wanted, and it would extend the debt ceiling through the 2012 election year as President Barack Obama insisted.
"We're very close," said Senate Minority Leader Mitch McConnell, the top Senate Republican who is playing a key role in the debt ceiling negotiations.
White House senior adviser David Plouffe said there was general agreement on a deal that would cut the US deficit in two stages. It was first time the White House had acknowledged that both sides were close to a deal.
The first US$1 trillion in cuts have been largely agreed by lawmakers. Under the emerging deal described by congressional aides, a further US$1.8 trillion would be recommended by a special committee appointed by Congress and automatic measures would implement the planned cuts if Congress failed to vote on them.
"It is clear that in the first stage we're going to get ... an extension of the debt ceiling, a first set of spending cuts over US$1 trillion, and then you're going to get this committee that will be charged with reporting out hopefully a balanced deficit reduction," Plouffe said.
An agreement would end weeks of political gridlock that has brought the world's largest economy teetering on the brink of an unprecedented default and close to losing its triple-A credit rating.
Senator Charles Schumer, a Democrat, said: "Default is far less of a possibility now than it was even a day ago because the leaders are talking, and talking in a constructive way."
Politicians were scrambling for a deal to avoid the possibility of market shock today, before tomorrow's deadline when the US loses its borrowing authority.
A US default would plunge financial markets and economies around the globe into turmoil. US stock markets last week posted their worst losses in a year and the dollar slumped.
The emerging deal seemed to answer key demands of both sides. It would have no tax increases as Republicans wanted, and it would extend the debt ceiling through the 2012 election year as President Barack Obama insisted.
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