July 26, 2011 / 1:33 PM / 7 years ago

Developments in U.S. debt talks

WASHINGTON (Reuters) - Here is the situation on Tuesday as lawmakers try to close in on a deal to raise the $14.3 trillion U.S. debt limit by August 2 and avoid a federal credit default:

* The Democratic-led Senate and Republican-led House of Representatives plan to consider rival plans to reduce the deficit and raise the debt ceiling. Votes may come as early as Wednesday.

* A Reuters poll shows that 30 of 53 economists surveyed think at least one of the major credit agencies will strip the United States of its top-notch credit rating and most also say wrangling over debt has already damaged the economy.

* Conservative Republican Representative Jim Jordan, who is aligned with the Tea Party movement, opposes a plan proposed by House of Representatives Speaker John Boehner, the top Republican in Congress. Jordan says there are not enough Republican votes to pass it in the House without Democratic support. Representative Steny Hoyer, the Democrats’ top vote counter in the House, says “a few” Democrats may vote for it.

* International Monetary Fund chief Christine Lagarde urges the United States to quickly resolve the stalemate, warning that failure to reach an agreement would have serious consequences for the world economy.

* President Barack Obama’s top economic adviser, Gene Sperling, tells CNN he believes Republicans and Democrats could reach a budget deal this week with “a minimum amount of compromise, a minimum amount of not ‘my way or the highway.’”

* New Washington Post-ABC News poll shows more than a third of Americans believe Obama’s policies have made the U.S. economy worse, but they blame Republicans just as much.

* Investors, who have been watching developments in Washington closely, grew more nervous but were not panicked ahead of a possible default or a cut in United States’ triple-A rating. Dollar hits record low against Swiss franc and drops against the yen while safe haven gold hovers near record high.

* A downgrade of the United States’ AAA credit rating is a bigger risk than a default and could add up to 0.7 percentage points to bond yields over time, according to members of a U.S. securities industry trade group, the Securities Industry and Financial Markets Association.

United Parcel Service Inc, the world’s largest package delivery company, gives a cautious economic outlook and cites stalled U.S. debt ceiling talks, sending its shares down more than 5 percent.

* Obama says in a televised address on Monday evening that defaulting on U.S. debt obligations would be “a reckless and irresponsible outcome” to the stalemate. He calls for a “fair compromise” and rejects temporary extension of debt ceiling.

* Boehner offers a rebuttal and agrees United States cannot default on its debt obligations. Boehner blames Obama for asking for “blank check” and says Americans won’t accept a debt limit hike without spending cuts, reforms.

Reporting by Deborah Charles and Donna Smith; Editing by Will Dunham

0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below