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Obama urges bipartisanship on debt
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Obama urges bipartisanship on debt

'We're almost out of time,' president says

  • White House Press Secretary Jay Carney on Friday said a compromise by Congress is necessary to solve the debt crisis.
    Associated Press screengrabWhite House Press Secretary Jay Carney on Friday said a compromise by Congress is necessary to solve the debt crisis.

President Barack Obama said Friday that Democrats and Republicans needed to work together on a plan to raise the debt ceiling and avoid a government default, and that while the two sides were not far apart they were "almost out of time." "There are plenty of ways out of this mess," Obama said in a brief statement at the White House.

Warning that the nation was in danger of having its credit rating lowered, leading to higher interest interest rates that amount to tax hikes on most Americans, Obama said a compromise plan was needed that could win approval in both the House and Senate.

House leaders, meeting for closed-door crisis talks early Friday, delayed a vote on a plan authored by House Speaker John Boehner to raise the nation's debt ceiling and reduce the deficit, an acknowledgment that it still lacked the Republican votes needed for passage, NECN reports.

The delay left the U.S. inching closer to a potentially catastrophic default on federal debt next Tuesday. The White House has warned the government will run out of money to pay all its bills unless a $14.3 trillion borrowing limit is increased by Aug. 2.

According to USA Today:

The president also indicated he would accept a two-part plan to raise the $14.3 trillion debt ceiling, the second part to include tax reform and changes to the entitlement programs Medicare, Medicaid, and Social Security.

But Obama also said the first step should be big enough to extend the debt ceiling beyond the 2012 election. Otherwise, he said, the country would have to "relive this crisis in just a few short months, holding our economy captive to Washington politics once again."

The debt ceiling bill favored by Boehner would initially raise the nation's borrowing limit by $900 billion and pass discretionary spending cuts of slightly more than that, CNN reports.

However, such a fix would only be temporary and require more action in the near future, necessitating what CNN's Charles Riley calls a "two-step" hike:

That increase in the ceiling would let Treasury to borrow until this winter. But then lawmakers will need to hike the ceiling again in order to make good on America's obligations. And that would require another vote.

The postponement of the Thursday vote was announced shortly after 10:30 p.m., after republican leaders apparently fell short of the 216 votes necessary for passage, The Atlantic reports.

Obama had threatened to veto Boehner's bill, and House Democrats were expressing unity in opposition to it.

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