Barack Obama warns Americans will suffer without debt crisis deal

President engaged in talks with Republican leader to negotiate deal, which would mean $3tn cuts in federal spending Barack Obama has warned of drastic consequences if America does not reach a deal on the debt crisis facing the country, saying: “If we do not solve it, every American will suffer.” With only 10 days left until the deadline, Obama and the Republican leader in the House, John Boehner, have been engaged in behind-the-scenes talks trying to negotiate a compromise. But a deal is still in doubt, facing fierce resistance from diehard Republicans in Congress – elected last year with the help of the Tea Party movement – and from left-leaning Democrats. Speaking at a public meeting in Maryland on Friday, Obama said defaulting on its debt was not an option. “We have never defaulted on our debt and we are not going to do it now,” he said. A default would be a major embarrassment to the US, with some economists warning it could trigger a new worldwide recession. The US chamber of commerce expressed nervousness over the prospect of America’s credit rating being downgraded. A deal would see more than $3 trillion slashed from federal spending over the next decade, including farm subsidies, military spending, social security and basic medical insurance. Federal payments to state governments could also be hit. State governors are laying down emergency plans, with California, among others, looking for alternative sources of borrowing to tide it over. Banks and businesses are also working feverishly preparing for worst-case scenarios. The crisis is the biggest test of wills yet between Obama and hardline Republicans endorsed by the Tea Party movement. It dwarfs the stand-off earlier this year when the federal government faced shutdown. Republicans want huge spending cuts to reduce the country’s massive national debt but oppose any tax rises. Democrats have agreed to spending cuts but want to protect the poorest and to ensure that any package includes tax rises. The US is closer to the brink than the 2

Posted by on July 22, 2011. Filed under News, Politics, World News. You can follow any responses to this entry through the RSS 2.0. You can skip to the end and leave a response. Pinging is currently not allowed.