Speaker of the House John Boehner is feeling pressure from the Tea Party flank of the Replublican Party.JAY LAPRETE
U.S. House of Representatives Speaker John Boehner on Sunday said he is ready to cut a deal on raising the debt limit if only President Barack Obama would get serious about spending cuts.
Mr. Obama warned that congressional failure to raise the debt limit could lead to a worse financial crisis than 2008-09 and urged that debate stay separate from spending cuts.
Both sides stuck to their well-staked out positions, showing little evidence of movement.
Mr. Boehner and fellow Republicans warned of dire consequences to the U.S. economy if the debt limit is not linked to spending cuts and deficit reduction.
"I'm ready to cut the deal today. You know, we don't have to wait until the 11th hour," Mr. Boehner said on CBS's "Face the Nation."
He questioned whether Mr. Obama was serious about deficit reduction. "He's talking about it. But I'm not seeing real action yet," Mr. Boehner said.
The Treasury Department is expected to hit its $14.3 trillion borrowing limit on Monday but says it can stave off default until Aug. 2 by drawing on other sources of money to pay its bills. That timetable has created a sense in Washington that any political deal may be far off.
Treasury Secretary Timothy Geithner and Federal Reserve Chairman Ben Bernanke have warned that failure to raise the debt limit could hamper the fragile U.S. economy, which is making a slow and painful recovery from the 2007-2009 downturn, with a 9 per cent unemployment rate.
In remarks recorded last week and broadcast by CBS News on Sunday, Mr. Obama repeated his stance that Republicans should not link the debt ceiling decision to spending cuts as part of deficit-reducing measures.
"If investors around the world thought that the full faith and credit of the United States was not being backed up, if they thought that we might renege on our IOUs, it could unravel the entire financial system," Mr. Obama said at a CBS News town-hall meeting.
"We could have a worse recession than we already had, a worse financial crisis than we already had."
Top Republicans emphasized that increasing the debt limit must go hand-in-hand with spending cuts.
"The whole reason we're running into the debt limit so soon is because of the spending spree that has occurred over the last two years," Republican House Budget Committee Chairman Paul Ryan said on CNN's "State of the Union."
Vice President Joe Biden is leading talks between the White House and lawmakers on how to reduce the massive U.S. budget deficits and raise the credit limit. He told reporters on Thursday that progress was being made but it was too early to be optimistic about a deal.
"We're focused right now on things we agree on," Republican Senator Jon Kyl, a member of the congressional group that meets with Mr. Biden, said on Fox News Sunday. "And there are some things but it's pretty small ball compared to the overall job that we're going to have to do.
"We're talking maybe about, optimistically, a couple hundred billion dollars when there's probably $2 trillion in savings that we've got to achieve in order to really get a handle on our out-of-control spending," he said.
Senate Republican Leader Mitch McConnell said on CNN's "State of the Union," "We need to impress the markets, impress foreign countries that we're going to get our act together and astonish the American people that the adults are in charge in Washington and are actually going to deal with this issue,"
A report from the think tank Third Way to be released on Monday said a debt default could plunge the United States back into recession, with some 640,000 U.S. jobs vanishing, stocks falling and lending activity stalling.