Obama urges compromise on economy
President Barack Obama bluntly told Republican congressional leaders that they must compromise quickly if the US government is to avoid an unprecedented default, marking an acrimonious end to a negotiating session at the White House that produced no evident progress toward a compromise on increasing the US debt limit.
He told Republicans, “Don’t call my bluff” by passing a short-term debt limit increase he has threatened to veto.
Republicans, many of them elected with the support of conservative tea party activists in 2010, are demanding deep spending cuts as the price for allowing a debt limit increase to pass.
But negotiations have bogged down over Mr Obama’s demand for tax increases that Republican politicians say they will not accept.
Another round of talks is set for today.
But with a threatened default less than three weeks away, Moody’s Investors Service announced it was reviewing the US bond rating for a possible downgrade, and the Treasury said the annual deficit was on a pace to exceed one trillion US dollars for the third year in a row.
With the negotiations at a seeming standstill, Republicans drew a warning of a different sort, from an unlikely source – the party’s Senate leader, Senator Mitch McConnell.
He warned fellow conservatives that a potentially catastrophic failure to raise the US debt limit would probably ensure Mr Obama’s re-election next year.
Mr McConnell’s comments were fresh evidence of deep Republican division on an issue of paramount importance to the United States and its economy.
Mr McConnell spoke as Mr Obama and congressional leaders met for a fourth straight day, struggling to avert an unprecedented government default threatened for August 2. The meeting broke up after a little more than two hours.
Talks are deadlocked. Politicians have begun advancing measures to determine who would be paid first if negotiations fail. One Democratic senator proposed favouring recipients of Social Security pension benefits.
Three Republican politicians offered a proposal to give priority to paycheques for members of the armed forces.
Treasury Secretary Tim Geithner has warned that a default could pose a catastrophic risk to the economy, still recovering from the worst recession in decades.
The agency announced the deficit was on pace to exceed one trillion US dollars for the third consecutive year, and was likely to top last year’s 1.29 trillion US dollars.
Mr McConnell predicted in a radio show that if Congress fails to act, Mr Obama will argue that Republicans are making the economy worse.
His comments were partly a rebuttal to conservatives who criticised his Tuesday proposal to let Mr Obama raise the debt limit without a vote of Congress.
Despite an extraordinary commitment of time, the private talks at the White House have made little if any progress since Mr Obama presided over the first session on Sunday.
Officials said negotiators would probably turn their attention to cuts that had been proposed in the earlier negotiations in the Capitol led by Vice President Joe Biden.
Participants in those talks disagree about precisely how much they had agreed to, however, and it was unclear what the prospects were for agreement.
With bipartisan talks scheduled to resume today, two Democratic officials quoted Mr Obama as telling Republicans: “Enough is enough. We have to be willing to compromise. It shouldn’t be about positioning and politics and I’ll see you all tomorrow.”
