Snapshot: Developments in debt talks

Reuters News
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Posted: Jul 14, 2011 3:38 PM
Snapshot: Developments in debt talks

WASHINGTON (Reuters) - Here is what is happening on Thursday in negotiations to raise the U.S. $14.3 trillion debt limit.

* President Barack Obama is to meet congressional Republican and Democratic leaders for a fifth straight day of talks to strike a deficit reduction deal that would allow an increase in the debt ceiling. Meeting set for 4:15 p.m. EDT (2015 GMT).

* Treasury Secretary Timothy Geithner tells Senate Democrats that time is running out to avoid a credit default and that August 2 is a hard deadline. He says it is time to send a "definitive signal" that the United States will avoid default and start tackling its long-term debt problems.

* Democrats try to focus blame on House Republican Leader Eric Cantor for failure to reach compromise on a deficit reduction deal that would clear the way for a credit limit hike. "Leader Cantor has yet to make a constructive contribution to these talks," says Senator Charles Schumer, a member of the Senate Democratic leadership.

* In a show of unity with Cantor, House Speaker John Boehner at a news conference defends his No. 2 Republican. "Any suggestion that the role that Eric has played is anything less than helpful is just wrong," Boehner says.

* Standard & Poor's has warned U.S. lawmakers privately that it would downgrade the country's debt if the Treasury Department is forced to prioritize payments because Congress does not raise the debt limit, according to someone in the room. Moody's Investors Service warned on Wednesday that the United States could lose its triple-A credit rating if Congress failed to act on the debt limit.

* China, the United States' biggest foreign creditor with more than $1 trillion in Treasury debt, urges Washington to adopt responsible policies to protect investor interests.

* Senate Democrats hold news conference to outline what will happen after August 2 when the government says it can no longer borrow money. After paying Social Security, Medicare and Medicaid healthcare, military and making interest payments, nothing would be left for border security, federal law enforcement, air traffic control, student aid, food safety and other government functions.

* A group of House Republicans sends a letter to President Barack Obama to tell him the government has enough money to pay U.S. creditors and Social Security and military pay after the Aug 2 deadline if the debt ceiling was not raised.

(Reporting by Donna Smith; Editing by Vicki Allen and Bill Trott)