WASHINGTON – President Barack Obama called on the American public to pressure elected officials to work out a compromise to raise the federal debt ceiling and avoid a potentially devastating default. According to CNN, a deal would allow the government to continue borrowing money to pay its debts after August 2. The challenge came during the president’s seventh prime-time televised address Monday night. The president singled out House Republicans for intransigence and said the political showdown is “no way to run the greatest country on Earth.” “The American people may have voted for divided government, but they didn’t vote for a dysfunctional government,” Obama said.
Republican House Speaker John Boehner responded by accusing the president of seeking a “blank cheque”. He insisted the US government’s “spending binge” was over, BBC informs. “The president has often said we need a ‘balanced’ approach – which in Washington means: we spend more… you pay more. Having run a small business, I know those tax increases will destroy jobs.” Boehner agreed the US “cannot default on its debt obligations”, but showed no indication he or his Republican caucus were willing to compromise on tax increases. And he called on Democrats to approve Republican proposals.
In Monday’s latest round of negotiations, Senate Democrats introduced a proposal that would trim USD 2.7 trillion over a decade. The plan would protect social programmes for the poor and elderly and a public pension programme – all popular among Democrats. It would not raise new tax revenue. House Republicans, meanwhile, unveiled their own plan that included USD 1.2 trillion in cuts caps on future spending, and offered a USD 1 trillion debt ceiling increase – not enough to last through the 2012 election. In his White House address later, Obama firmly rejected the Republican plan, in part because it would require another round of debt limit talks in six months.
US dollar declines
The US dollar has fallen against other major currencies as talks continue over how to reach a deal to avert a US debt default. The US dollar was at USD 1.6399 against the UK pound, from USD 1.6280 late on Monday. The dollar was also down against the euro, to 1.4482 from 1.4378, and against the Swiss franc. Stocks fell over continued fear of high levels of debt in Europe. Both Spain and Italy, countries with huge levels of debt, have been forced to borrow at higher interest rates – despite a deal last week that aimed to solve the Greek debt crisis.