Mon, Aug 01, 2011 - Page 1 News List

US lawmakers edge closer to deal to avoid debt default

Reuters, Washington

Hopes emerged that US lawmakers were close to a last-minute deal yesterday that could raise the country’s debt ceiling by up to US$2.8 trillion and assure financial markets that Washington will avoid default.

Prospects that a significant package was within grasp brightened after Republican and Democratic leaders reopened stalled talks with the White House, and Senate Minority Leader Mitch McConnell said he was confident and optimistic.

“I think we’ve got a chance of getting there,” McConnell, a Republican, said.

ABC News reported that US debt negotiators had reached a tentative agreement on a package, but a White House official cautioned that a deal was “not there yet.”

Senate Majority Leader Harry Reid, a Democrat, pushed back a key procedural vote on a debt limit plan by 12 hours to 1pm in Washington yesterday, buying additional time for both sides to hammer out details before Asia markets open.

“There are negotiations going on at the White House now on a solution that will avert a catastrophic default on the nation’s debt,” Reid said on the Senate floor late on Saturday.

“There is still a distance to go,” he said.

Time is running out for the US government to raise its US$14.3 trillion borrowing limit before tomorrow’s midnight deadline when the Treasury says it will run out of money to pay its bills and would no longer be able to service the national debt. However, a cautious optimism had begun emerging on Capitol Hill.

“We’re a long way from any kind of a negotiated agreement, but there is certainly a more positive feeling about reaching an agreement this evening than I’ve felt in a long time,” Senator Richard Durbin, the No. 2 Democrat in the Senate, told reporters late on Saturday.

If a credible bipartisan deal is tantalizingly close, the White House has said it would accept a very short-term extension of the debt limit to allow lawmakers time to nail down the compromise.

Given talks are heading down to the wire, Washington is chafing against the deadline to get a deal agreed and legislation drafted, voted upon and signed into law.

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