Friday, July 1, 2011

Debt Deal Needed by Mid-July to Avert US Default

Negotiators will need to reach agreement on raising the U.S. debt limit no later than July 22 so that legislation can get passed in time to stave off a default on U.S. debt, two Democratic officials familiar with the talks said.

The Senate yesterday canceled its July 4 recess to remain in session next week during debt-limit talks after President Barack Obama a day earlier called on Congress to stop taking vacations while the debt-ceiling talks are unresolved.

An agreement will have to be reached by some point between July 15 and July 22 in order to write a bill and comply with congressional rules requiring advance publication before consideration, said the officials, who spoke on condition of anonymity to discuss the negotiations.

The officials said the timeline was necessary in order to raise the legal debt ceiling by Aug. 2, the date the Treasury Department projects it will no longer be able to meet U.S. obligations.

Democrats and Republicans are at an impasse over how to cut the deficit, which Republicans insist must be done prior to agreeing to raise the nation’s $14.3 trillion debt limit before the Aug. 2 deadline. Republicans are demanding large spending cuts and no tax increases, while Democrats say higher tax revenue must be part of a “balanced” plan. (read more)