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US budget: No new deal in White House talks | US budget: No new deal in White House talks |
(about 11 hours later) | |
Talks at the White House to try to break the deadlock over the US national debt have broken up without agreement. | Talks at the White House to try to break the deadlock over the US national debt have broken up without agreement. |
President Barack Obama and congressional leaders have agreed to resume the talks, which ended after 75 minutes, on Monday. | President Barack Obama and congressional leaders have agreed to resume the talks, which ended after 75 minutes, on Monday. |
Mr Obama is struggling to marshal support for a budget package that would cut the national debt by $4tn (£2.5tn). | Mr Obama is struggling to marshal support for a budget package that would cut the national debt by $4tn (£2.5tn). |
The US risks defaulting on its debts in just over three weeks, when the current federal budget runs out. | The US risks defaulting on its debts in just over three weeks, when the current federal budget runs out. |
Eight top Senate and House of Representatives leaders met - unusually - on a Sunday in the Cabinet Room of the White House. | Eight top Senate and House of Representatives leaders met - unusually - on a Sunday in the Cabinet Room of the White House. |
As the talks got under way, Mr Obama was asked whether they could "work it out in 10 days". | As the talks got under way, Mr Obama was asked whether they could "work it out in 10 days". |
"We need to," he replied. | "We need to," he replied. |
The Republican Speaker of the House of Representatives, John Boehner, said on Saturday that he favoured a less ambitious target for debt reduction of $2tn. | The Republican Speaker of the House of Representatives, John Boehner, said on Saturday that he favoured a less ambitious target for debt reduction of $2tn. |
Republicans baulk at tax increases in the Obama proposals. And his Democrat allies are no more enthusiastic about proposals to cut social welfare and Medicaid. | Republicans baulk at tax increases in the Obama proposals. And his Democrat allies are no more enthusiastic about proposals to cut social welfare and Medicaid. |
Before Sunday's meeting, White House aides insisted Mr Obama would hold out for bigger savings. | Before Sunday's meeting, White House aides insisted Mr Obama would hold out for bigger savings. |
"He's not someone to walk away from a tough fight," said White House chief of staff William Daley. | "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." | "Everyone agrees that a number around $4tn is the number that will make a serious dent in our deficit." |
US Treasury Secretary Timothy Geithner was adamant the deadline for a deal - 2 August - could not be extended. | |
He warned there could be catastrophic damage to the US economy unless Congress agrees to raise the national debt ceiling beyond the current $14.3tn. | He warned 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. |