Obama stresses debt-plan urgency

29 July 2011 Last updated at 21:56 GMT President Obama: "This is one burden we can lift ourselves"

US President Barack Obama has said Democrats and Republicans must compromise to cut the US budget deficit and raise the debt limit.

He warned time had almost run out, before Speaker John Boehner made an impassioned speech in the House of Representatives ahead of a vote.

Meanwhile, Democrats announced they would put their plan to the Senate.

The fiscal fiasco leaves the US inching closer to a potentially catastrophic default on federal debt next Tuesday.

The US government will start running out of money to pay all its bills unless a $14.3tn (?8.79tn) borrowing limit is increased by 2 August.

'Last train leaving'

At the White House, Mr Obama accused House Republicans of pursuing a partisan bill that would force Washington into another debt limit fight within months.

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It's odds-on the president won't have to veto the Republican plan, as the Tea Party seems to have done the job for him”

End Quote Mark Mardell BBC North America editor He said: "There are plenty of ways out of this mess, but we are almost out of time."

"The time for putting party first is over," he added. "The time for compromise on behalf of the American people is now."

In Congress, the arm-twisting continued on Friday.

House Speaker John Boehner and his lieutenants were working to whip Republicans into line behind their plan to cut the budget while raising the debt limit.

A vote on that bill was tentatively scheduled for between 17:45 local time (21:45 GMT) and 18:15 local time (22:15 GMT), after being called off on Thursday night when it became clear Mr Boehner lacked support within his own party.

Mr Boehner appeared to have won over recalcitrant conservatives in his party by strengthening language calling for the so-called "balanced budget amendment".

That proposal calls for a vote on an amendment to the US constitution - a move certain to be rejected by the Senate.

Senior Senate Democrats said the upper chamber would vote on some sort of compromise proposal at the weekend, and invited Senate Republican Leader Mitch McConnell for talks.

Analysts say that if the Senate passes legislation first, it could increase the president's leverage in a final deal.

"Too much is at stake to waste even one more minute - the last train is leaving the station," Senate Democratic Majority Leader Harry Reid said.

But Mr McConnell accused Democrats of wasting precious time and obstructing a deal by vowing to block Mr Boehner's bill, should it be passed in the House.

"Republicans have been doing the hard work of governing this week," he said.

Mr Boehner convened a closed meeting of all 240 House Republicans on Friday morning to outline tweaks he has made overnight to the legislation.

Mr Boehner and other Republican leaders spent all day Thursday arm-twisting dissident lawmakers, but they were unable to win over enough conservative hard-liners.

Some Republicans - including Tea Party supporters who won House seats last year and oppose raising the debt limit under any circumstance - feel the Boehner bill would not cut enough from the US budget.

Mr Boehner's plan faces certain rejection by the Democratic-controlled Senate, as well as a White House veto threat, but could form the basis of an eventual compromise.

Brinkmanship

It would reduce spending by about $900bn and raise the debt limit by nearly the same amount.

Speaker John Boehner's plan cannot pass the Democratic-controlled Senate

The Reid plan - which Mr Obama supports - would cut $2.2tn from deficits, and raise the debt ceiling by $2.7tn.

One possible scenario is that Mr Obama and Senate Democrats could shape a bill to their liking, then dare divided House Republicans to plunge the nation into default by rejecting it.

The Boehner and Reid plans overlap in key ways, such as trimming spending over 10 years and shunning President Obama's call for tax increases on the wealthy and corporations.

But Mr Boehner's approach would force another debt-limit showdown during next year's presidential campaign, something Mr Obama has fiercely opposed.

Mr Reid's plan would see the ceiling lifted until after the November 2012 elections.

Analysts predict a last-minute scramble for a compromise and razor-edge votes in both chambers, with the high-stakes game of legislative brinkmanship expected to continue all weekend.

Washington hit its debt ceiling in May, but has used accounting adjustments, as well as higher-than-expected tax receipts, to continue operating.

In recent decades, the US Congress has increased the government's borrowing authority dozens of times as a matter of routine.

But this year newly elected conservative Republicans have demanded steep cuts to the budget deficit as the price of an increase.

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Obama seeks end to debt showdown

16 July 2011 Last updated at 01:25 GMT President Obama said Congress had 'run up the credit card'

President Barack Obama has said he is seeking a "big deal" with Republicans to reduce the budget deficit and keep the US from defaulting on its debt.

At the White House, Mr Obama warned time was running out for a bargain, but rejected Republican plans to cut public spending without raising taxes.

Cross-party talks between Mr Obama and congressional leaders have failed to make a breakthrough.

The US must raise its $14.3tn (?8.9tn) debt limit to borrow beyond 2 August.

Failure to reach a deal would rattle a world economy still trying to put the 2008 downturn behind it, analysts say.

'Out of time'

Though both Democrats and Republicans have expressed a commitment to averting a financial collapse, Republicans have refused to agree to the tax hikes on corporations and wealthy Americans proposed by Mr Obama.

"I am still pushing for us to achieve a big deal," Mr Obama said in a White House news conference on Friday.

"If we can't do the biggest deal possible, then let's still be ambitious; let's still try to at least get a down payment on deficit reduction."

The president said he was prepared to enact cuts to benefits and welfare schemes, but would need Republicans to consider some revenue increases in return.

"If they [Republicans] show me a serious plan, I'm ready to move even if it requires some tough decisions on my part," the president said, speaking at the White House during the third news conference in two weeks on the issue.

"I am confident that we cannot only impress the financial markets, we can also impress the American people that this town can actually get something done once in a while," he added.

But the president warned the country is "obviously running out of time".

"If Washington operates as usual and can't get anything done, let's at least avert Armageddon," Mr Obama said.

The president added that he has told members of Congress "they need over the next 24 to 36 hours to give me some sense of what your plan is to get the debt ceiling raised".

Mr Obama said Republicans have a "unique opportunity to do something big" and stabilise the economy for decades to come, adding that a failure to raise the debt ceiling would mean "effectively a tax increase for everybody".

Republicans, who control the House of Representatives, say they will not raise the debt limit unless Democrats agree to major spending cuts to reduce the deficit, while Democrats have said cuts must be accompanied by some tax increases.

The president said on Friday that "poll after poll" had demonstrated that Republicans are out-of-touch with what voters want,

"The majority of people want a balanced approach to the budget," Mr Obama said.

Meanwhile, Republicans and Democrats emerged from closed meetings on Capitol Hill only to reiterate their stances.

US under review

On Thursday, Standard & Poor's became the second of the major credit rating agencies to place US debt under review, citing an increasing risk of a payment default.

Continue reading the main story US government currently runs a $1.5tn budget deficit, requiring it to issue debt in the form of treasury bills, bonds and other securitiesPublic debt was $14.3tn on 31 May, up from $10.6tn when Mr Obama took office in January 2009Most is held by the public, with the rest held in US government accountsCongress has voted to raise the US debt limit 10 times since 2001

Sources: US Treasury, Congressional Research Service, Congressional Budget Office

Another ratings agency, Moody's, warned a day earlier that it might cut Washington's triple-A debt rating.

If no agreement is reached with the next 24-36 hours, meetings would have to continue into the weekend, aides suggested.

The political impasse boiled over on Thursday to the Senate floor, where Majority Leader Harry Reid, a Democrat, called House Republican Leader Eric Cantor "childish".

Mr Obama needs the Republican-led House of Representatives and Democratic-held Senate to agree a deal to trim the US deficit, and allow Washington to borrow beyond the 2 August deadline.

He has said he is willing to countenance cuts to social safety-net programmes dear to Democrats if certain tax breaks are eliminated.

Republicans have rejected the latter proposal, saying that would stifle investment and job growth.

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