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Obama, Democrats Weigh Temporary Debt Limit Increase

President Barack Obama during a news conference at the White House, June 29, 2011
President Barack Obama during a news conference at the White House, June 29, 2011

U.S. President Barack Obama and Senate Democrats are reported to be considering a short-term increase on the U.S. debt ceiling to avoid the government from going into default and break an impasse between Mr. Obama and Republican lawmakers.

Reuters news agency says the deal between Obama and Senate Democrats would cover the nation's borrowing needs for seven months. Congress must approve an increase in $14.3 trillion debt ceiling by August 2, when the administration says the government will run out of money to pay its loans.

Democratic officials say a deal needs to be in place by July 22 to give Congress enough time to debate the matter and bring it to a vote.

The White House and congressional Democrats have been negotiating with Republicans to reduce the nation's $1.4 trillion budget deficit in exchange for raising the debt ceiling. Talks broke down last week after Republican lawmakers walked out of negotiations chaired by Vice President Joseph Biden, in protest over the White House's insistence to push for tax increases.

President Obama and other Democrats are calling for an end to various tax breaks for the nation's wealthiest Americans, as well as large oil companies and managers of lucrative investment funds.

Republicans, who control the House of Representatives, say they will only agree to deep spending cuts before they agree to raise the debt ceiling.

Democratic Senator Charles Schumer accused Republicans earlier Thursday of deliberately trying to sabotage the fragile economic recovery in order to hurt Obama heading into next year's elections.

Democratic Senate Majority Leader Harry Reid announced Thursday he is canceling the chamber's July 4 Independence Day holiday recess next week to concentrate on the budget talks.

Some information for this report was provided by AFP and Reuters.