Washington Works On Fall-Back Plan For US Debt Limit
Following the reports of the White House, it was pursuing a last-ditch plan with the Congress in order to raise the debt limit and prevent the default that could cause chaos in the global financial markets.
The time is running short and there are only two weeks left until the US runs out of money to pay off the bills. Anyway, the debt talks are stalled, while the president insists that he is concentrated on the comprehensive long-term deal on deficit reduction.
Negotiations Between Democrats And Republicans
The Reuters reports that the ideological divide over the spending on popular social programs and tax increase between Republicans and Democrats has resulted the focus shift to a backup plan that could give responsibility and potentially blame Obama for raising the debt ceiling of $14.3 trillion.
The Republicans and Democrats in the Senate are crafting the fall-back plan that was offered by the top Republican in the chamber Mitch McConnell. This plan is aimed to authorize the President Obama to raise the US limit on taking out loans in three stages through the election in November 2012.
The Balanced Budget Deal
Republicans stated that they are going to push for a measure to reduce and cap the spending of the government and amend the American Constitution to require the balanced budget. However, should the Congress send it to the Obama’s desk, the president promised to veto it.
In case the Congress doesn’t permit the Treasury of the United States to sell more US debt by August 2, the country will default on its financial obligations. Such outcome can push the US economy back into recession raising the interest rates.
