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US budget: Congress leaders in talks at White House | US budget: Congress leaders in talks at White House |
(40 minutes later) | |
US President Barack Obama is meeting Congress leaders at the White House to try to hammer out a budget deal. | US President Barack Obama is meeting Congress leaders at the White House to try to hammer out a budget deal. |
He is proposing a programme that would cut the national debt by $4tn (£2.5tn). | He is proposing a programme that would cut the national debt by $4tn (£2.5tn). |
But Republicans oppose the proposed tax increases, and Mr Obama's Democrat allies oppose public service cuts. | But Republicans oppose the proposed tax increases, and Mr Obama's Democrat allies oppose public service cuts. |
It is just over three weeks before the US risks defaulting on its debts, if a federal budget cannot be agreed. Mr Obama said before the meeting that a deal was needed. | It is just over three weeks before the US risks defaulting on its debts, if a federal budget cannot be agreed. Mr Obama said before the meeting that a deal was needed. |
He was joined by eight top Senate and House of Representatives leaders in the Cabinet Room for an unusual Sunday meeting. | |
As the talks got under way, Mr Obama was asked whether the White House and Congress could "work it out in 10 days". | |
"We need to," he replied. | |
The Republican Speaker of the House of Representatives, John Boehner, has said he favours a less ambitious target for debt reduction than the $4tn proposed. | The Republican Speaker of the House of Representatives, John Boehner, has said he favours a less ambitious target for debt reduction than the $4tn proposed. |
On Saturday he said a debt reduction package of $2tn would be more realistic. | |
White House aides insist Mr Obama will hold out for bigger savings. | |
"He's not someone to walk away from a tough fight," said White House chief of staff William Daley. | |
"Everyone agrees that a number around $4tn is the number that will make a serious dent in our deficit." | |
US Treasury Secretary Timothy Geithner is adamant the deadline for a deal - 2 August - cannot be extended. | |
He warns there could be catastrophic damage to the US economy unless Congress agrees to raise the national debt ceiling beyond the current $14.3tn. | |
If no agreement is reached, the government will effectively start to run out of money to pay civil servants, government contractors, pensioners or holders of government debt. | If no agreement is reached, the government will effectively start to run out of money to pay civil servants, government contractors, pensioners or holders of government debt. |
Economists and the White House have warned that such a default could push the country back into recession and have a global economic impact. | Economists and the White House have warned that such a default could push the country back into recession and have a global economic impact. |
'No alternative' | 'No alternative' |
When it came to the crunch in the past, Congress has voted to raise the debt ceiling, giving government access to the cash it needed. | When it came to the crunch in the past, Congress has voted to raise the debt ceiling, giving government access to the cash it needed. |
This year, however, newly-empowered Republicans are determined to prevent any tax increases and want to see aggressive measures to reduce the deficit in exchange for agreeing to raise the debt ceiling. | This year, however, newly-empowered Republicans are determined to prevent any tax increases and want to see aggressive measures to reduce the deficit in exchange for agreeing to raise the debt ceiling. |
In a round of interviews before Mr Obama's meeting with Congressional leaders on Sunday, Mr Geithner said the US would not default. | In a round of interviews before Mr Obama's meeting with Congressional leaders on Sunday, Mr Geithner said the US would not default. |
He said Republicans had "no alternative" to making a budget deal with the White House and urged them not to walk away from efforts to reach a large, comprehensive deal on debt reduction. | He said Republicans had "no alternative" to making a budget deal with the White House and urged them not to walk away from efforts to reach a large, comprehensive deal on debt reduction. |
The Obama administration wanted "the biggest deal possible" on debt reduction, Mr Geithner told NBC's Meet the Press. | The Obama administration wanted "the biggest deal possible" on debt reduction, Mr Geithner told NBC's Meet the Press. |
Last week Mr Boehner and Mr Obama worked on a massive package of spending cuts and new tax measures that would have reduced the debt by $4tn over 10 years. | Last week Mr Boehner and Mr Obama worked on a massive package of spending cuts and new tax measures that would have reduced the debt by $4tn over 10 years. |
Ended in impasse | Ended in impasse |
The proposals included reining in spending on entitlement programmes such as Social Security and Medicare, which Democrats hold dear. | The proposals included reining in spending on entitlement programmes such as Social Security and Medicare, which Democrats hold dear. |
But it also involved tax hikes and closing tax loopholes for the wealthiest Americans, something opposed by many Republicans. | But it also involved tax hikes and closing tax loopholes for the wealthiest Americans, something opposed by many Republicans. |
In a statement released late on Saturday, Mr Boehner said he was pulling back from the $4tn package, because of the tax increases it included. | In a statement released late on Saturday, Mr Boehner said he was pulling back from the $4tn package, because of the tax increases it included. |
"Despite good-faith efforts to find common ground, the White House will not pursue a bigger debt reduction agreement without tax hikes," he said. | "Despite good-faith efforts to find common ground, the White House will not pursue a bigger debt reduction agreement without tax hikes," he said. |
"I believe the best approach may be to focus on producing a smaller measure, based on the cuts identified in the [Vice-President Joe] Biden-led negotiations, that still meets our call for spending reforms and cuts greater than the amount of any debt limit increase." | "I believe the best approach may be to focus on producing a smaller measure, based on the cuts identified in the [Vice-President Joe] Biden-led negotiations, that still meets our call for spending reforms and cuts greater than the amount of any debt limit increase." |
A group of Republican and Democratic members of Congress led by Mr Biden had identified about $2tn in cuts in talks over May and June but those ended in an impasse. | A group of Republican and Democratic members of Congress led by Mr Biden had identified about $2tn in cuts in talks over May and June but those ended in an impasse. |