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Intense Talks Continue to Avoid Default on US Debt

Marc Morial (r) and Ben Jealous, of the National Urban League, and National Association for the Advancement of Colored People (NAACP) address reporters after talks with President Obama, Jul 21, 2011
Marc Morial (r) and Ben Jealous, of the National Urban League, and National Association for the Advancement of Colored People (NAACP) address reporters after talks with President Obama, Jul 21, 2011

Intense negotiations continue in Washington for a possible deal to reduce deficits and raise the government's $14.3 trillion debt ceiling. President Obama brought congressional leaders from his Democratic party back for more discussions late on Thursday.

The top Democrats in the House of Representatives, Nancy Pelosi and Steny Hoyer, along with Senators Harry Reid and Dick Durbin, returned to the White House for another round of discussions with Mr. Obama.

Earlier, President Obama's spokesman Jay Carney spent most of a news briefing knocking down media reports that Mr. Obama and the Republican House Speaker John Boehner were on the verge of a significant deal.

"There is no deal," said Carney. "We are not close to a deal. We are, obviously the president is in discussions with all the leaders of Congress, as well as other members, and exploring the possibility of getting the biggest deal possible."

Earlier, media reports said Mr. Obama and Speaker Boehner were hammering out details, or starting to close in on a major deal as the New York Times reported it, of $3 trillion or more in combined spending cuts and revenue.

Saying there was no progress to report, Carney said it was "not in doubt" that Congress will act to ensure that the debt ceiling will be raised. He reiterated that Mr. Obama would support a short-term extension but only if a larger agreement was actually in hand.

On Capitol Hill, lawmakers from both parties assessed a plan by the so-called "Gang of Six" Republican and Democratic senators proposing to slash deficits by $3.7 trillion over 10 years, with an overhaul of the U.S. tax system. But the proposal would be difficult to turn into legislation and move through Congress by August 2.

House speaker Boehner said he had prepared House Republicans to expect that any deal would have to involve compromise, but said Congress must act to raise the debt limit before August 2.

"It would be irresponsible on behalf of Congress and the president not to be looking at backup strategies for how to solve this problem," said Boehner.

Like Boehner, House Minority Leader Pelosi declined to detail her conversations with Mr. Obama. She said lawmakers will not allow a debt ceiling default, but any deal must help economic growth.

"The U.S. government cannot default on its obligations," said Pelosi. "How we proceed must show a sign of serious deficit reduction. How we do that cannot deter economic growth.

President Obama and Vice President Joe Biden also met Thursday with Treasury Secretasry Timothy Geithner, who has warned of the dangers of a debt default.

Mr. Obama also had another meeting, connected with the deficit and debt ceiling issue and opposition in his Democratic base to possible changes that could impact key so-called "safety net" programs such as Medicaid and Social Security.

He sat down with Marc Morial and Ben Jealous, representing the nation's two largest civil rights organizations - the National Urban League, and the National Association for the Advancement of Colored People (NAACP).

Jealous summarized the message they brought to Mr. Obama.

"We talked about the fact that a great nation in tough times must do great things," said Jealous. "And balancing our budget, balancing our fiscal house on the backs of retirees, students, poor people, the medically under-served is not a great thing. It's a cruel thing."

Morial told reporters Mr. Obama "understands fundamentally" that deep budget cuts to so-called safety net programs would be counterproductive to urban communities and the nation at large.

A White House statement said Mr. Obama stressed in the meeting that any deficit and debt agreement must involve shared sacrifice, but reaffirmed that the budget cannot be balanced "on the back of the most vulnerable Americans including the middle class, low-income families, seniors, and students."