Obama calls on party leaders to stave off default

July 06, 2011, Wednesday/ 16:39:00

President Barack Obama summoned leaders of both US parties to the White House to hammer out a deal to stave off a US debt default with the potential to trigger a major, worldwide financial crisis.

Speaking Tuesday, Obama called for a deal to raise the nation’s borrowing limit that not only cuts spending, as opposition Republicans are demanding, but also raises revenues in the form of tax increases - something that they violently oppose. “We need to come together over the next two weeks to reach a deal that reduces the deficit and upholds the full faith and credit of the United States government and the credit of the American people,” Obama said at the White House. Obama said Republican and Democratic leaders from the House and Senate were invited to meet on the issue Thursday at the White House. That would bring the top eight lawmakers together with Obama, Vice President Joe Biden and top administration financial officials. “It’s my hope that everybody’s going to leave their ultimatums at the door, that we’ll all leave our political rhetoric at the door,” Obama said. Obama met with Boehner on Sunday, the first session since Republicans last month abandoned negotiations being led by Vice President Joe Biden. “We’ve made progress, and I believe that greater progress is within sight, but I don’t want to fool anybody - we still have to work through real differences,” the president said.

Raising the US debt ceiling, usually little more than a formality in most years, has turned into a game of political brinksmanship ahead of the 2012 presidential elections with Republicans demanding huge spending cuts as the price for their support. Although not required to raise the debt limit, lawmakers and the administration are seeking deficit cuts in the range of $2.4 trillion over the coming decade to balance a similar increase in the debt limit - enough to keep the government afloat past the November 2012 election. Currently, the debt limit is $14.3 trillion. It remained unclear where compromise could be found. Democrats are refusing to sign off on cuts of such magnitude without at least some tax increases. Republicans say they won’t sign off on any tax hikes at all, including those Obama wants targeting the wealthiest Americans or closing loopholes to corporations. “We’re not dealing just with talking points about corporate jets or other ‘loopholes,’” said Boehner, a Republican. “The legislation the president has asked for - which would increase taxes on small businesses and destroy more American jobs - cannot pass the House, as I have stated repeatedly.” Boehner said he’d be happy to join discussions at the White House but predicted they “will be fruitless until the president recognizes economic and legislative reality.” In his remarks Tuesday, Obama said he strongly opposes a stopgap, short-term debt-limit increase, as suggested by some lawmakers. Obama insisted that any deal must include new tax revenue.

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