US debt ceiling debate drags on

North America correspondent Jane Cowan

Updated July 28, 2011 10:36:33

Efforts to reach a deal to avert a calamitous debt default by the US have hit yet another snag, just five days before the deadline.

The Democrats and Republicans are struggling to come up with a compromise to cut the deficit and raise the debt ceiling.

Now the Republican plan is in disarray, dogged by an accounting error and dissent within conservative ranks.

In the halls of power, politicians on both sides of the aisle are resorting to unconventional methods to prompt a resolution.

"Listen, I've been praying over this for three days," said one politician.

"You know magic things can happen here in Congress," said US senator Harry Reid.

So far there is no magic but plenty of political circus, as a divided Congress gropes for a bipartisan deal to cut the deficit, raise the debt ceiling and avert a default.

With time already short, Republican leader John Boehner has had to postpone a vote on his plan until tomorrow after the independent Congressional Budget Office crunched the numbers and found the proposal fell about $150 billion short of the $1.2 trillion worth of spending cuts Republicans said it contained.

Democrats such as Chuck Schumer, who are proposing their own plan to raise the debt limit, leapt on it.

"The speaker's plan is on life support and it's time for him to pull the plug," he said.

The accounting error marks another embarrassment for the Republican leader, with John Boehner already struggling to muster enough support from his own rank-and-file, and right wing groups denouncing his plan as too weak.

"Well at first they want more and, my goodness, I want more too," said Chuck Schumer.

He says the speaker needs to lead.

"Every day he spends twisting arms in his caucus we careen closer to catastrophic default," Mr Schumer added.

"How many times does he have to throw red meat to the extreme right in his caucus to please them? Enough already. Let's get moving and get something real done."

However, staging a rally on Capitol Hill, the ultraconservative Tea Party movement is now openly threatening to run out of office those same Republicans it swept to power in last year's mid-terms if they do not maintain a conservative line.

"We are watching you and we are paying attention, and we are not going away. We're not taking it any more," said one Tea Party politician.

At the White House, press secretary Jay Carney played down suggestions there is some wiggle room on the deadline after which the US would go into default.

"While at midnight on August 2 we don't all turn into pumpkins, we do, as a country, lose our borrowing authority for the first time in our history," he said.

"There is no escaping that. There are no off-ramps. People keep looking for off-ramps. They don't exist."

And, so far, neither does a compromise.

Topics: business-economics-and-finance, economic-trends, international-financial-crisis, united-states

First posted July 28, 2011 10:13:46

Source: http://www.abc.net.au/news/2011-07-28/us-debt-ceiling-debate/2813918

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