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1:22 PM
akshay varma
US debt crisis: Republicans delay key vote
The US Congress and world markets are facing more uncertainty after Republican leaders delayed action on a plan to raise the government's $14.3 trillion borrowing limit, narrowing the chances for a deal to avert a debt default.
7:00AM BST 27 Jul 2011
3 CommentsA week before an Aug. 2 deadline for Congress to act, members of Congress had held out hope for a compromise even as rival Republican and Democratic proposals have paralysed Washington and prompted growing nervousness over the risks of a downgrade to the top-notch US credit rating.
But serious discussions looked to be delayed for several days after Republicans pushed back a House of Representatives vote on their plan originally expected for Wednesday.
Staffers scrambled to rewrite the bill after an analysis by non-partisan budget experts found it would not deliver the level of spending cuts it promised.
The vote will now be delayed until Thursday at the earliest, meaning Congress will almost certainly be negotiating right up until the Aug. 2 deadline when the Treasury Department has said it will run out of borrowing room.
Many analysts have predicted dire consequences for the US and global economies if the United States defaults. Credit rating agencies have threatened to downgrade the United States' gold-plated AAA rating if Congress and the White House don't extend the debt ceiling and take steps to bring long-term deficits under control.
While Democrats have apparently dropped their demand for tax increases for the wealthy, the main sticking point remains how many trillions of dollars to cut in exchange for a critical increase in the government's $14.3 trillion debt limit.
An official congressional analysis said the plan devised by Republican House of Representatives Speaker John Boehner would produce smaller savings than originally promised - less than $1 trillion in spending cuts over the coming decade rather than the $1.2 trillion he estimated on Monday.
As ther impasse dragged on, some Americans seemed to edge closer to notion that the Aug. 2 deadline might pass without a solution. The stock market fell again, although not dramatically.
Public clashing between Democratic President Barack Obama and the Republicans showed no sign of easing. The White House declared Mr Obama would veto the Republican bill, even if it somehow got through the House and the Democratic-controlled Senate.
The Boehner bill would require congressional action to raise the debt ceiling this summer, and again before the 2012 elections.
Mr Obama strongly opposes that last requirement, arguing that it would reopen the delicate and crucial debt discussions to unending political pressure during next year's campaigns.
The president supports a separate bill, pushed by Majority Leader Harry Reid in the Democratic-controlled Senate, that would raise the debt ceiling enough to tide the government over through next year - and the elections
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