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US Borrowing Limit Talks Gain Urgency

  • Kent Klein

Congressional Democrats speak to reporters after meeting President Obama at the White House, May 2, 2011

Congressional Democrats speak to reporters after meeting President Obama at the White House, May 2, 2011

A second credit rating agency warns that the U.S. government could lose its top rating if Congress and the Obama administration cannot agree soon to raise the nation’s debt limit. President Barack Obama discussed the issue at the White House with Democratic lawmakers on Thursday.

President Obama spent a second straight day meeting with members of Congress in an effort to accelerate bipartisan talks on raising the government’s debt ceiling.

The United States reached its borrowing limit of $14.3 trillion May 16. Opposition Republicans in Congress say they will not approve an increase in that limit unless Democrats agree to massive spending cuts.

After Democrats in the House of Representatives met with the president, their leader, Nancy Pelosi, said lawmakers cannot fail to reach an agreement.

“Our members came together around the idea that not defaulting on the debt was a pivotal moment to enable us to do deficit reduction in a real way, in a balanced way, and in a way that will give confidence to the markets so we do not default on our loans," said Nancy Pelosi.

Mr. Obama met with House Republicans on Wednesday.

Their leader, House Speaker John Boehner, agreed Thursday that failure is not an option.

“It is pretty clear that if we do not act soon and get our fiscal house in order, the markets will act for us," said John Boehner.

Vice President Joe Biden is moderating negotiations between Democratic and Republican lawmakers on raising the debt limit.

White House Press Secretary Jay Carney responded Thursday to questions about why Mr. Obama is not more directly involved in the talks.

“The president is very engaged in this process," said Jay Carney. "He is updated constantly and meeting regularly with his team that is participating in those negotiations. As for when he might meet with the Speaker of the House or others, I do not have a timetable for you on that. We look forward to those negotiations continuing to make progress.”

Treasury Secretary Timothy Geithner met with Republican lawmakers Thursday. Afterward, he said he is confident a debt crisis will be averted.

Meanwhile, the credit rating agency Moody’s warned Thursday that the continued lack of progress on the issue could jeopardize the U.S. government’s high credit rating.

Another agency, Standard and Poor’s, issued a similar warning in April.

Moody’s also cautioned that the government’s status could be downgraded if no long-term plan is reached to reduce the federal budget deficit. That deficit has topped $1 trillion for three straight years.

Moody’s said the amount of political bickering on the issue has exceeded expectations.

The number-two House Democrat, Steny Hoyer, said the report adds urgency to the talks.

“I think we are prepared to work with the Republicans in a bipartisan way to make sure that America’s creditworthiness is not put at risk," said Steny Hoyer. "I think what Moody’s has done makes that even more clear that it needs to be an objective of us all.”

The two sides have until August 2 to reach an agreement.

Separately, reports released Thursday show that American workers' productivity is growing more slowly than last year and that slightly fewer people signed up for unemployment compensation last week.

The government releases its May unemployment figures on Friday.

Also Friday, President Obama will highlight one of the bright spots in the U.S. economy. He will visit a Chrysler automobile factory near Toledo, Ohio to highlight the U.S. auto industry’s comeback.

Chrysler and General Motors have returned to profitability, two years after the government spent roughly $80 billion to keep them from collapsing. Ford, which did not seek government money, is also making a profit.

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