Feuding parties refuse to budge in US debt limit talks

REPUBLICANS IN Congress showed no signs of giving in to White House demands for more revenue to be included in an agreement to raise the US borrowing limit, as renewed tension broke out in the delicate fiscal negotiations.

“This debt limit increase is problem and I think it’s time for him to lead by putting his plan on the table – something that the Congress can pass,” Republican speaker of the House of Representatives John Boehner said.

Mitch McConnell, the top Republican in the Senate, said: “After years of discussions and months of negotiations, I have little question that as long as this president is in the Oval Office a real solution is probably unattainable.” Republicans have said they would not agree to a debt ceiling increase unless it was accompanied by deep spending and budget reforms.

In addition, they are battling against demands by congressional Democrats and the White House for some higher taxes to be part of any fiscal deal.

This disagreement prompted Mr Boehner to withdraw from efforts pushed by Mr Obama to strike a big deficit reduction agreement that would save $4,000 billion over the next decade, to focus instead on an agreement worth about $2,000 billion. But yesterday’s remarks suggested the feuding parties were digging in.

Still, Tim Geithner, US treasury secretary, said the Obama administration was aiming to reach a fiscal deal as early as this week. “Let me be clear: the debt limit will be raised. Failure is not an option,” Mr Geithner said. “We want to wrap up the broad lines of an agreement by the end of this week, certainly by the end of next week,” he added.

Mr Geithner’s remarks underscored the tight deadline facing the White House and congressional leaders as they prepared to meet for the fourth time in a week.

The Obama administration would like an agreement in place by next Friday so it can be evaluated by congressional budget analysts and considered by lawmakers in time for a vote by August 2nd.

The treasury has said that by that point the US would no longer be able to borrow money to cover its financial obligations, leading to a potentially devastating default.

Business lobby groups also attempted to pressure Congress into ending the stalemate. – Copyright The Financial Times Limited 2011