Obama hosts crisis talks over US debt

Boehner, the House speaker, said talks with Obama had become futile [AFP]

US President Barack Obama has met Republican party leaders at the White House in a last-ditch attempt to reach a deal on the country’s debt.

Obama summoned Republican House Speaker John Boehner and other top congressional leaders for the meeting on Saturday, after talks between party leaders on a debt deal broke down over disputes about tax revenue.

Politicians have only 10 days left to raise the country’s debt ceiling, or the US will default on its loans, a scenario that could have huge implications for the rest of the world.

The US government now owes $14.3 trillion, which is its current legal limit, and is more than the size of the economies of China, Japan and Germany put together. 

Al Jazeera’s Patty Culhane, reporting from Washington, said the leaders met for less than an hour, after which the White House released a statement saying that “Congress is being completely irresponsible”, she said.

“If they were trying to send a message that they’re in this for the long haul, meeting for less than an hour probably didn’t do that,” our correspondent said.

Following the talks, Senate Republican leader Mitch McConnell said congressional leaders were working on fresh legislation to prevent the United States defaulting on its debt.

“The bipartisan leadership in Congress is committed to working on new legislation that will prevent default while substantially reducing Washington spending,” he said in a statement after the meeting.

‘Out of time’

Obama on Friday said talks with Republican leaders toward a debt deal to avert default broke down, but that both sides had been only about $10bn apart on spending cuts.

Boehner, McConnell, Senate Majority Leader Harry Reid, and House Minority Leader Nancy Pelosi were to attend Saturday’s meeting in order to “explain to me how it is that we are going to avoid default”, Obama said on Friday.

Obama told reporters “there does not seem to be a capacity” for Republicans to agree to a debt limit deal and railed at House Speaker Boehner for walking away from talks.

After saying his own plan was an “extraordinarily fair deal”, Obama said, “We have now run out of time.”

‘Taxes destroy jobs’

Earlier, Boehner said he would begin negotiations with Senate leaders aimed at meeting an August 2 deadline to avert the unprecedented US debt default.

In a letter to congressional colleagues, Boehner, the Republican house speaker, said talks with the Democratic president had become futile, citing Obama’s demand to raise taxes.

“The president is emphatic that taxes have to be raised,” Boehner wrote. “As a former small businessman, I know taxes destroy jobs.”

Boehner’s surprise announcement came a day after reports he and Obama were nearing a 10-year deal on $3tn in cuts that riled the president’s fellow Democrats.

They complained that it included no guarantees of additional tax revenues and would likely force benefit cuts in popular entitlement programs such as Social Security and Medicare.

Just a month ago, Boehner’s deputy, House Republican leader Eric Cantor, walked out of deficit-reduction negotiations with Vice President Joe Biden, complaining that the administration was insisting on tax hikes despite Republican objections.

The US hit its debt ceiling on May 16 and has used spending and accounting adjustments, as well as higher-than-expected tax receipts, to pay its bills and continue operating normally – but can only do so until August 2.

The largest US creditor, China, has twice warned that the US must protect investor interests, as ratings agencies Moody’s and Standard & Poor’s have said the sterling Triple-A US debt rating was in danger of a downgrade.