Saturday, July 30, 2011

U.S. debt vote highlights bitter divide: "Time for compromise is now"

The stage appears set for behind-the-scenes negotiating in Washington this weekend as congressional leaders try to reach a deal to raise the U.S. government's debt ceiling.

The Republican-controlled House of Representatives approved emergency legislation Friday night to avoid an unprecedented government default, but Senate Democrats scuttled it less than two hours later in the hopes they can win enough support for their party's own measure.

Politicians in both parties have said they are determined to avoid a default, yet there was little evidence of progress on a compromise during a long day of intense political manoeuvring.

The Democrats have a new version of their bill ready to go to the Senate at the stroke of midnight Saturday. It could be voted on in the early hours of Sunday, but there's nothing to guarantee it will pass.

Only three days remain before the government reaches its debt limit of $14.3 trillion.

If no deal is reached by Tuesday and the government defaults on its loans, the U.S. would be left unable to pay many of its bills and economists warn that would lead to turmoil on the global financial markets. (more)