Snapshot: Developments in debt talks

Reuters News
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Posted: Jul 23, 2011 5:03 PM
Snapshot: Developments in debt talks

WASHINGTON (Reuters) - Here is what is happening on Saturday in negotiations to raise the U.S. government's $14.3 trillion debt limit by August 2 and avoid a credit default:

* President Barack Obama holds White House meeting with House Speaker John Boehner, Senate Democratic Leader Harry Reid, House Democratic Leader Nancy Pelosi and Senate Republican Leader Mitch McConnell. Obama is trying to get agreement on a way to raise the debt limit after negotiations with Boehner on a broad deficit reduction package collapsed late Friday.

* Republican aides following the Saturday meeting say lawmakers are putting together $3 trillion to $4 trillion package of deficit reduction that will follow a two step process. Lawmakers hope to show progress on the last ditch effort to raise the debt ceiling by 4 p.m. EDT (2000 GMT) Sunday, which would be just hours before Asian financial markets open.

* In a written statement following the meeting, Boehner says "Congress will forge a responsible path forward." He says leaders working to find bipartisan solution to reduce Federal spending and to avoid a credit default.

* McConnell, in a statement, says the bipartisan leadership is committed to crafting new legislation to prevent a U.S. default and to cut spending.

* Pelosi tells reporters after the meeting that Obama and congressional leaders are "definitely not" considering a short-term debt limit increase as a way to break the impasse.

* Congressional staffs were asked to "work together throughout the weekend" to try to craft a deficit reduction bill to clear the way for a debt limit increase, an aide says. The goal is to have legislation ready by Monday for Congress to consider, a senior Senate aide says.

* Financial markets are growing more edgy and U.S. banks and businesses say they are making contingency plans for the possibility of a debt default. If Congress fails to act by the Aug 2, deadline, when the U.S. government will run out of enough money to pay all its bills, interest rates would jump, the value of the dollar would sink and the effects would ripple through economies around the world.

(Reporting by Donna Smith and Richard Cowan; editing by Todd Eastham)