The White House and top lawmakers hurriedly hunted Sunday for a deal to stop the world's richest country from an unthinkable and ruinous default on its debt just hours before Asian markets were to open. "We may have a few stressful days coming up, and stressful for the markets of the world and the American people," US President Barack Obama's chief of staff, William Daley, told CBS television as the stalemate dragged on.
"But in the end there's no question in my mind the government of America will not default," he said, as Britain warned "right-wing nutters" in the US Congress posed a worse threat to the world economy than Europe's own financial crisis.
But Obama, his Democratic allies and Republican foes gave little sign of progress towards a compromise to raise the $14.3 trillion limit on borrowing by the US government, which will run out of cash to pay its bills August 2.
"This is about what is doable at the 11th hour," Republican House Speaker John Boehner told Fox News Channel. "I'm confident that the bipartisan leaders here in the congress can act. The White House won't get serious, we will."
All sides agree cash-strapped Washington must close its yawning budget deficit but disagreed on the size and blend of spending cuts and revenue increases as well as on how and whether to slice into the social safety net.
US Treasury Secretary Timothy Geithner said a default would be "unthinkable" and warned against a short-term debt ceiling hike that could force another stand-off in the middle of the 2012 election campaign.
Obama is seeking a second term in a contest defined by his handling of the ailing US economy and shaped by Republican anger at government spending.
Washington hit its debt ceiling on May 16 but has used spending and accounting adjustments, as well as higher-than-expected tax receipts, to continue operating normally so far.
Finance and business leaders have warned failure to raise the US debt ceiling by August 2 would send shockwaves through the world economy, while Obama has predicted a default would trigger economic "Armageddon."
Republicans, notably newly elected members close to the archconservative "Tea Party" movement, have rejected Obama's call for tax hikes on the rich and wealthy corporations, a key bone of contention in the discussions.
British Business Secretary Vince Cable, a Liberal Democrat and one of the most outspoken members of Britain's coalition government, blamed the conservative rightwing for the stalemate.
"The irony of the situation at the moment, with markets opening tomorrow morning, is that the biggest threat to the world financial system comes from a few right-wing nutters in the American Congress rather than the eurozone," Cable told the BBC.
And Geithner hit out on ABC's "This Week" at what he called "a vocal, loud, frankly irresponsible minority in their parties who... want to take this country to the edge of default. And that is not acceptable."
Boehner told members of his majority that he hoped for a framework deal by Sunday afternoon to soothe investor worry, notably in Asia. He was due to talk with House Republicans later Sunday at 4:30 pm (2030 GMT), a party source said. The speaker said the hard-fought negotiations centered on a two-step process to cut $3-4 trillion in spending over 10 years as part of a deal to raise the debt limit by the deadline.
Geithner told CNN press lawmakers to come up with a plan that lifts "this threat of default from the country for the next 18 months."
Republicans have called for spending cuts over 10 years at least equal to the dollar amount of any debt limit increase.
Democrats have pledged to defend cherished social safety net programs, which the president has targeted for cuts. The treasury chief said under one plan, a committee with exceptional powers would be set up in the coming months to put together a framework of tough reforms to the US economy with a clear deadline for moving forward.
The United States has "to demonstrate to the world that we can get our fiscal house in order," Geithner told Fox News Sunday.
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