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Washington Wrangles Over Debt as Deadline Approaches

House Speaker John Boehner of Ohio, at podium, accompanied by members of the House Republican leadership, speaks during a news conference at The Republican National Committee on Capitol Hill in Washington, July 26, 2011

U.S. President Barack Obama, his Democratic Party allies in Congress and opposition Republicans are still haggling over competing plans to raise the government borrowing limit as an August 2 deadline draws closer. Without an agreement, Washington could default on some of its obligations.

Uncertainty caused by the bitter partisan debate and the lack of apparent progress toward a compromise have worried investors. That is why many stock markets have declined and the value of "safe-haven" investments like gold and the Swiss Franc have hit record highs against the U.S. dollar.

Experts say rival plans put forward by House Republicans and Senate Democrats will cut expenses less than the plans' authors first thought.

The non-partisan Congressional Budget Office (CBO) says a plan by Senate Majority Leader Harry Reid, a Democrat, to cut $2.7 trillion over 10 years, overstates savings by $500 billion. Reid says Republicans should embrace his plan because it is a compromise that incorporates many spending cuts Republicans have supported and does not include tax increases they strongly oppose.

The CBO experts earlier said the plan put forward by House Speaker John Boehner cuts about one-third less than the $1.2 trillion Republican supporters said it would. Republicans have delayed a vote on their plan until at least Thursday as they revise the plan to make deeper cuts.

White House Chief of Staff William Daley says he is confident the United States will not default on its debt. He told television interviewers that there are a lot of debt reduction plans on the table and everyone is stressed as the August 2 deadline approaches. But he said that, in the end, Congress will do what is right.

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