Just 24 hours from the opening of markets in Japan and elsewhere in Asia, President Barack Obama and top U.S. legislators have yet to reach an agreement on a Republican-backed plan to cut spending by $3-4 trillion over 10 years in exchange for their vote to raise the $14.3 trillion debt limit (debt default just 10 days away).
House Republican leader John Boehner, who abruptly broke off talks with the White House on Friday but was present Saturday, has said publicly that he hoped to be able to announce a “viable framework for progress” by 4 p.m. EDT on Sunday, before the Asian markets open ahead of the U.S. workweek.
“Over this weekend, Congress will forge a responsible path forward,” he said in a statement.
But as talks continued into the evening, Democratic Senate Majority Leader Harry Reid said — according to LA Times — he was “deeply disappointed in the status of the negotiations” with Republicans, warning of dire consequences if they would not agree to raise the debt limit through the end of next fiscal year.
“I have said repeatedly, including last night and again today, that I will not support any agreement that fails to raise the debt ceiling though the end of 2012,” Reid said. “Anything less than that will fail to provide the certainty that the markets — and the world — are looking for, risking an immediate downgrade of America’s credit rating….We have run out of time for politics,” Reid said. “Now is the time for cooperation.”
But despite the rhetoric, time is running short. Administration officials say if Congress and congressional leaders don’t agree on a vote to raise the debt ceiling by the Aug. 2 deadline, the U.S. government will exhaust its legal borrowing authority and consequently will not be able to pay its bills.
The White House fears a big drop in investor confidence in U.S. stocks and bonds if an agreement is not reached, causing U.S. markets to plunge on Monday.