Obama calls more talks Monday to seek debt deal

WASHINGTON – US President Barack Obama called more budget talks Monday at the White House after failing to reach an elusive deal with Republicans to stave off a potentially catastrophic US debt default.

The White House said shortly after 75 minutes of discussions Sunday concluded that the president would meet congressional leaders again the following day after holding a 1500 GMT press conference on the crisis talks.

Republicans are refusing to raise America’s $14.29 trillion debt limit unless Obama first agrees to curb the ballooning budget deficit, in part by cutting costly government-funded social welfare programs.

The president and Democrats say they are willing to make some cuts to the so-called entitlement programs but want the Republicans to meet them half way by allowing tax hikes for millionaires and billionaires to increase revenue.

The talks are part of a final major push to reach a deal to raise the congressionally determined limit on US borrowing, now set at $14.29 trillion, in the face of a budget deficit expected to hit $1.6 trillion this year.

The US hit the ceiling on May 16 but has since used spending and accounting adjustments, as well as higher-than-expected tax receipts, to continue operating without impact on government obligations.

By August 2, though, the government will have to begin withholding payments to bond holders, civil servants, retirees or government contractors, and the White House has urged a deal by July 22 to have time for Congress to pass it.

Economists warn that if the United States defaults, it could lose its ability to borrow, souring fraught financial relations with creditors like China and sending the already sour global economy into a tailspin.