White House plans emergency cuts as debt deadline looms

Uncertainty still rules as US political parties fail to compromise on a strategy to tackle economic crisis The White House is drawing up emergency plans for next week’s debt crisis deadline in the event that Congress fails to reach a last-gasp compromise. With only six days left, the White House dismissed as “political theatre” a new bill before the Republican-controlled House that would cut spending in return for raising the $14.3tn (£8.7tn) debt ceiling. The White House spokesman, Jay Carney, addressing the daily press conference today, said the bill was hated by the Democratic-controlled Senate and the White House and was “dead on arrival”. The Senate will not vote for it and, even if it did, Barack Obama would veto it. Fifty-one Democratic members of the Senate, a majority, published a letter pledging to vote against the House bill. Democrats in the Senate are preparing a bill of their own but the chances are Republicans in the House would vote that down too. Global markets, initially sanguine about the crisis and confident of an eventual compromise, were increasingly jittery on Thursday. There were early market falls but US stocks gained and the dollar rose during the day, buoyed by unexpectedly good unemployment figures. The Democratic leader in the Senate, Harry Reid, warned: “Default will rock our financial system to its core.” He expressed hope that there could still be a deal. “Magic things can happen here in Congress in a very short period of time under the right circumstances,” he said. The White House, too, expressed optimism that a compromise could be reached. Negotiations are continuing in private between the White House and senior Republicans and Democrats on a possible short-term emergency deal. But Carney admitted that, in the event there is no deal, the treasury would explain its plans in detail before 2 August. Carney said: “As we get closer to that date, the treasury will explain how it will manage a situation that is impossible.” He acknowledged for the first time that the uncertainty was already causing harm to the US economy. The White House will almost certainly make its priority paying interest on its debts so that the US does not default for the first time in its history. But the consequence could be delaying monthly payments to federal workers, soldiers and other employees, and millions of cheques to social security recipients, veterans and

Posted by on July 28, 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.