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White House threatens to veto Republican debt plan

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The White House has threatened that President Barack Obama will veto a current Republican two-step plan to resolve the US debt crisis if it is passed by US lawmakers.

The Office of Management and Budget said the US administration “strongly opposes” the plan and if it is presented to Obama “the president’s senior advisers would recommend that he veto this bill.”

Republicans and Democrats in the US Congress remained deeply divided ahead of a deadline for a deal to avert a calamitous default. But White House officials said they still hoped for an agreement.

“We remain confident,” White House spokesman Jay Carney told reporters. “In the end we believe that Congress will behave appropriately.”

With a week to go before the United States hits an August 2 deadline to raise the $US14.3 trillion ($A13.11 trillion) debt ceiling enabling it to continue borrowing, Democrats and Republicans stuck by rival plans on a way out of the impasse.

But Carney told reporters earlier that a veto threat was a “moot” point as the White House felt the plan put forward by Republican House Speaker John Boehner had no chance of passing the Senate.

“As the president made clear last night, we’re in a stalemate. The speaker’s proposal cannot pass the Senate, will not pass the Senate, will not reach the president’s desk,” Carney said.

Boehner has proposed a two-step plan with debt increases first to February or March 2012, and later to 2013. It includes deep spending cuts that would exceed the raise in the debt ceiling, saving $1.2 trillion over 10 years.

It would also cap future spending, and set up a joint Congress committee which would draw up a proposal to cut the deficit by a further $1.8 trillion over 10 years.

But it does not set out any revenue increases, something which Obama has insisted upon saying that the nation’s wealthiest citizens and biggest corporations should contribute more to US coffers.

Obama has also ruled out any two-stage debt increase, saying in an address to the nation late Monday that it would be “kicking the can further down the road” and fail to provide a long-term solution.

AFP