The White House says there is “momentum” toward a deal to avert a disastrous early August debt default, but has denied media reports that a compromise with top lawmakers may be imminent.
President Barack Obama huddled for nearly two hours at the White House with top Senate and House Democrats on Thursday, unsettled by news reports he was close to a broad agreement with Republican House Speaker John Boehner.
“We believe there is momentum behind the idea of a balanced approach to a significant agreement,” spokesman Jay Carney told reporters with time running short before an August 2 deadline to raise the $US14.3 trillion ($A13.24 trillion) US debt ceiling.
But Carney rejected a New York Times report, citing anonymous congressional officials, that said aides to Obama had started informing key lawmakers that a deal was in the works with Boehner.
“There is no deal. We are not close to a deal,” said the spokesman.
“There is no progress to report, but we continue to work on getting the most significant deficit-reduction package possible.”
The Times said the accord would include cuts to government health and retirement benefits programs dear to Democrats as well as new revenues – a blend in line with how the White House has previously defined a “balanced” deal – generated through closing loopholes and ending tax breaks.
Such an agreement would likely anger Democrats who pledged to protect the US social safety net as well as Republicans who vowed to oppose increasing revenues, endangering its prospects for passage in the divided Congress.
“The decisions we’ve got to make right now are tough ones, and nobody likes them. I mean it’s always easier to give people more benefits and cut their taxes than it is to raise more revenue and reduce benefits,” the president told National Public Radio (NPR) in an interview to be broadcast on Friday.
The National Journal, a publication that covers US politics, said the White House and top House Republican leaders were discussing a 10-year, $US3 trillion ($A2.78 trillion) plan to cut the deficit while raising the debt ceiling.
A senior Democratic aide later described media reports of a looming deal as overblown and said it would take another few days to hammer out a compromise from three deficit-cutting options he described as small, medium, and large.
Boehner’s office also denied the New York Times report, with spokesman Michael Steel saying that “while we are keeping the lines of communication open, there is no ‘deal’ and no progress to report.”
Washington hit its debt ceiling on May 16 and has used spending and accounting adjustments, as well as higher-than-expected tax receipts, to pay its bills and continue operating normally. But it can only do so until August 2.
Finance and business leaders have warned failure to raise the US debt ceiling by then would send shock waves through the world economy, while Obama has predicted a default would trigger economic “Armageddon.”
China, the largest US creditor, has twice warned that Washington must protect investor interests, while ratings agencies Moody’s and Standard & Poor’s have said the sterling Triple-A US debt rating was in danger of a downgrade.
AFP
