US Secretary of State Hillary Clinton on Monday promised worried world markets that the White House and top lawmakers would avert a disastrous US debt default with a deadline one week away. Pressure mounted on President Barack Obama and Democratic and Republican leaders of Congress to shape an 11th-hour deal without which the world's richest nations will run out of cash to pay its bills August 2.
Clinton, near the end of an Asian tour, said "the political wrangling in Washington is intense," amid deep rifts on how to pair an increase in the $14.3 trillion US debt limit with painful steps to reduce a massive budget deficit. "I am confident that Congress will do the right thing and secure a deal on the debt ceiling and work with President Obama to take steps to improve our long-term fiscal outlook," the top US diplomat said in Hong Kong.
There were few signs of any emerging consensus, with Republicans who lead the House of Representatives and Democrats who control the Senate set to push rival plans after successive efforts to forge compromise collapsed acrimoniously. House Republicans were to meet behind closed doors at 2:00 pm (1800 GMT) to discuss a strategy driven by House Speaker John Boehner, while House Democrats led by Minority Leader Nancy Pelosi were to gather at 5:30 pm (2130 GMT).
Democratic Senate Majority Leader Harry Reid was pressing ahead with his own plan after meeting late Sunday with Pelosi and Obama, and was to meet at 6:00 pm (2200 GMT) with his rank-and-file. 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 but can only do so thought August 2. At that point, US leaders will face an agonising choice about cutting an estimated 40 cents of every dollar in spending and defaulting either on debt payments or on other obligations like government health or retirement benefits.