Obama says debt talks 'constructive'

US PRESIDENT Barack Obama and the Republican leader in the House of Representatives signalled yesterday that they were both ready to make compromises to avoid a looming fiscal crisis in the US and to increase the nation’s borrowing authority.

But on a day when both sides met at the White House to hash out a possible $4 trillion (€2.8 trillion) fiscal deal ahead of an August 2nd deadline to avoid a US default, there was scepticism in Washington whether a grand bargain was feasible. Any deal needs to include deep cuts in spending and popular entitlement programmes as well as reductions in corporate tax breaks to some industries.

“It was a very constructive meeting,” Mr Obama said, adding that he would reconvene on Sunday with congressional leaders in the expectation that the parties would “at least know where each other’s bottom lines are and hopefully be in a position to begin the hard bargaining”.

The White House said there was sufficient time to hammer out a deal.

“People were frank,” the president told reporters after the session, which lasted about 90 minutes. “We discussed the various options available to us. Everybody reconfirmed the importance of completing our work.”

Mr Obama acknowledged the difficulty of achieving the breakthrough that has eluded him and congressional leaders in weeks of negotiating. They are seeking a deficit-slashing accord to pave the way for a vote to increase the $14.3 trillion debt limit.

Republican speaker John Boehner said comprehensive tax reform was “under discussion”, apparently opening the door for new revenues to be part of a final deal as long as tax rates did not increase overall.

“Everything is on the table except raising taxes on the American people,” Mr Boehner said.

Previously, Republicans had ruled out even closing loopholes for private jet owners, a sign of their staunch opposition to any increase in revenue.

But the partisan rancour that has infected Washington since last year’s congressional election, when Republicans won the majority of the House, makes the possibility of a grand bargain to which rank-and-file members of both political parties could agree highly unlikely. – (Copyright The Financial Times Limited 2011/Bloomberg)