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Deal very close on default: US Senator

Democrats and Republicans are 'very close' to reaching deal on the US debt ceiling,he said.

Written by Agencies | Washington |
July 31, 2011 11:37:24 pm

Democrats and Republicans are are ‘very close’ to reaching a USD 3 trillion deal on the US debt ceiling that would avert a disastrous default,a top Republican Senator said.

“Well,we are very close. We had a very good day yesterday,both the president and the vice president called me and the president talked to the speaker as well,and they understand that with a Republican majority in the House and a very robust Republican minority in the Senate we have to come together,” Senate Minority Leader Mitch McConnell told the CNN in an interview.

“I think this agreement is likely to encompass up to USD 3 trillion in spending reductions,no tax increases that we know will kill jobs,the president made that argument last December when he passed a bill to extend the current tax rates for two more years,” McConnell said.

McConnell said they have made “dramatic progress” in that direction since April,when the administration was asking them to raise the debt ceiling with no spending reductions at all,nothing,just a clean debt ceiling.

“I think I can pretty confidently say that this debt ceiling increase will avoid default,which is important for everybody in America to know,we are not going to have a default for the first time in our 235 year history,” McConnell said.

If Congress fails to raise the current USD 14.3 trillion debt ceiling by August 2,Americans could face rising interest rates and a declining dollar,among other problems.

“We’re not going to have job-killing tax increases in it. We are going to deal with the problem the American people sent us here to deal with,which is that the government has been spending too much,” McConnell said.

A Republican source close to the negotiations was quoted by CNN that the goal is USD 3 trillion in savings,and that the deal would include a USD 2.4 trillion increase in the debt ceiling.

However,the Democrats said that there was no final agreement yet.

“What’s clear is that pretty much both parties agree that there’s going to be a first stage of deficit reduction,over a trillion dollars,” David Plouffe,Senior White House Adviser,told the ABC news in an interview,adding that the details are still being worked out.

“We still have some hard work to do. But it would be inconceivable that we don’t. It’s clear that it’s hurting consumer confidence,business confidence. We have to remove this specter,” he said.

“The debt ceiling has been raised dozens of times over the last couple decades. It has to be raised again. And,again,let’s remember what we’re talking about here. These are bills that Congress already put on the credit card. They’re required to pay for them,” the top Obama aide said.

The third-ranking Democrat in the Senate,Chuck Schumer of New York said that the mood on Capitol Hill is “relief that we won’t default.”

“There is no final agreement. Nobody has signed off on a final agreement. So it’s premature to talk about any specifics. The most important thing this morning is if there’s a word right here that would sum up the mood,it would be relief,relief that we won’t default,” he said.

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