Washington: President Barack Obama is urging US lawmakers to quickly forge a deal to keep the world's richest nation from plunging into debt default, saying he is "willing to compromise."
Obama has warned of economic "Armageddon" should Congress fail to raise the debt limit to allow more US borrowing, with his administration highlighting disastrous ripple effects that would churn through the global financial system.
But after five straight days of crisis talks ended Thursday without a clear solution, Obama implored fellow Democrats and opposition Republicans to embrace "shared sacrifice" to help break the stalemate that has led ratings agencies and top US lender China to sound the alarm over US creditworthiness.
"I'm willing to compromise. I'm willing to do what it takes to solve this problem, even if it's not politically popular," Obama said in his weekly radio address yesterday.
"Simply put, it will take a balanced approach, shared sacrifice, and a willingness to make unpopular choices on all our parts."
On Friday, he said he had given top lawmakers 24 to 36 hours to talk to their rank and file and return to him with a viable plan. That time window essentially ended midday yesterday.
The US government reached its debt limit of $14.29 trillion in May, and since then the Treasury Department has used special measures to allow the government to keep paying its bills.
But unless the limit is raised by August 2, the Treasury says, growing spending and debt service commitments will force a default. That could mean the United States could fail to pay "entitlements" such as Social Security and Medicare, and make interest payments on bonds.
On Friday, Obama renewed his call for a "grand bargain" which would cut domestic entitlement programs dear to Democrats. But he also insisted on "cutting out certain tax breaks and deductions for the wealthiest Americans," a proposal Republicans have flatly rejected.
According to The Washington Post, leaders on Capitol Hill have already begun forming a powerful congressional committee that would be charged with drawing up the "grand bargain" possibly by the end of the year.
The president, sure to be judged in the 2012 elections based on his handling of the jobs-poor US economy, also signaled he would not reject a last-minute compromise key lawmakers were drafting behind closed doors.
The Senate Republican and Democratic leaders, Mitch McConnell and Harry Reid, have been crafting a compromise that would pair spending cuts with a debt limit increase.
That measure, described by aides who warned it was still in flux, would include some USD 1.5 trillion in spending cuts but would essentially let Obama raise the debt ceiling with only Democratic support in Congress.
Economists and finance and business leaders have warned that failure to raise the US debt ceiling by August 2 could send shock waves through a world economy still reeling from the 2008 collapse.
Ratings agencies Moody's and Standard & Poor's have warned they may downgrade Washington's sterling Triple-A debt rating, and leading US creditor China, Wall Street titan JPMorgan Chase and the Federal Reserve have also sounded the alarm.
With the US "running out of time," as Obama put it, his top Republican foes in Congress called for votes next week on their plan for severe spending cuts on the way to amending the US Constitution to require cash-strapped Washington to balance its budget.
The long-shot Republican plan, all but certain to fail in the Democratic-led Senate, pleased conservative lawmakers close to the "Tea Party" movement that fiercely opposes raising the debt limit and seeks deep spending cuts.
Republicans have argued that tax hikes Obama wants would smother investment that feeds job growth at a time when the US economy faces stubbornly high unemployment of 9.2 percent.