Tug of War: spending cut for debt limit increase !

Tuesday, The White House hesitate to agree with Republicans' demand that President Obama accept more than $2 trillion in spending cuts in exchange for their agreement to raise the $14.3 trillion U.S. debt limit.

House Speaker John Boehner, the top Republican in the U.S. Congress, Monday laid down a tough new yardstick in talks over the U.S. debt, saying spending cuts must exceed any boost to the U.S. borrowing limit.

A senior White House official told Reuters that Obama agrees debt reduction is an urgent priority and the president has offered a "balanced, fair plan" for $4 trillion in deficit reduction.

Obama believes bipartisan negotiations led by Vice President Biden, which resume Tuesday, can lead to an agreement on further substantial reduction, the official said.

"But it is simply irresponsible to declare that you will tank the U.S. economy if you don't get what you want," the official said.

Treasury Secretary Geithner has warned of economic catastrophe

if the federal government's borrowing authority is not increased and has told Congress that he will be able to stave off default until Aug. 2 by drawing on other accounts once the debt limit is reached.

An increase of $2 trillion will be needed to cover the country's borrowing needs through the November 2012 elections, Treasury officials have told lawmakers, but Congress could opt for a smaller increase if more time is needed to hash out a deal.

Obama wants to raise taxes on wealthier Americans and shield popular entitlement programs like the Social Security and Medicare programs for the elderly.

( Source:Reuters )
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