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    July 15, 2011

Obama to Address Debt Crisis

   VOA News
   U.S. President Barack Obama makes a point during a news conference on
   debt negotiations with the U.S. Congress in the briefing room of the
   White House in Washington, July 11, 2011.
   Photo: Reuters
   U.S. President Barack Obama makes a point during a news conference on
   debt negotiations with the U.S. Congress in the briefing room of the
   White House in Washington, July 11, 2011.

   U.S. President Barack Obama will hold a news conference at the White
   House Friday morning to discuss his negotiations with congressional
   leaders over raising the national borrowing limit and decreasing the
   deficit.
   Decision time
   At the end of a fifth day of talks Thursday, Obama told negotiators it
   is "decision time," and gave them until Saturday at the latest to
   evaluate their options in hopes of reaching some kind of an agreement.
   Meanwhile, the top two leaders in the U.S. Senate are working on a
   proposal that will allow the president to raise the debt limit on his
   own without prior congressional approval. Democratic Majority Leader
   Harry Reid said talks are focused on Republican leader Mitch
   McConnell's plan that would give Obama the authority to raise the debt
   limit by $2.5 trillion in three separate installments, while imposing
   several trillion in spending cuts over the next decade.
   Obama and congressional leaders are in contentious negotiations to
   raise the $14.3-trillion borrowing limit while also cutting spending.
   But talks have stalled over disagreements about the need to raise
   taxes. If the borrowing limit is not raised by August 2, the U.S. may
   have to stop payments on some of its obligations.

   Credit downgrade
   The powerful credit rating agency Standards and Poors has put the
   United States on its credit watch list, warning there is a "substantial
   likelihood" it could downgrade the country's triple-A rating because of
   the ongoing battle over decreasing the deficit and increasing the
   borrowing limit.
   In a statement Thursday, the rating agency said it believes there is an
   increasing risk of a "substantial policy stalemate" that would continue
   even if politicians manage to agree to raise the debt ceiling in the
   short term. S&P said it may lower the U.S. rating within the next three
   months if it finds the government has not, or is not close to,
   achieving "a credible solution" to the problem of the ballooning
   national debt.
   S&P joins [1]Moody's Investors Service, which warned Wednesday the U.S.
   risks losing its top credit rating if lawmakers fail to reach a deal. A
   downgraded U.S. bond rating would likely lead to higher interest rates
   for U.S. loans.
   Wall Street warning
   Top U.S. financial officials Thursday issued a new round of warnings
   about the potential catastrophe that awaits if lawmakers fail to raise
   the country's debt limit in time.
   In this photo provided by CBS News, U.S. Treasury Secretary Timothy
   Geithner talks about the debt crisis on CBS's "Face the Nation" in
   Washington, July 10, 2011

AP

   In this photo provided by CBS News, U.S. Treasury Secretary Timothy
   Geithner talks about the debt crisis on CBS's "Face the Nation" in
   Washington, July 10, 2011

   Treasury Secretary Timothy Geithner said Washington needs to meet its
   financial obligations and "it's time we move."
   Federal Reserve Chairman Ben Bernanke told a Senate committee any
   failure to raise the debt limit would have a "calamitous outcome." He
   warned excessive spending cuts could damage the fragile economic
   recovery.
   There are also growing calls from businesses and banking firms for a
   solution.
   The head of one of the biggest private U.S. financial firms Thursday
   told reporters it is "imperative that the debt ceiling be fixed."
   JP Morgan Chase Chief Executive Jamie Dimon said it would be
   irresponsible for the country to default on its debt because the result
   could be catastrophic.
   A Chinese credit rating agency said Thursday it has placed U.S.
   sovereign debt on a negative watch. Dagong Global Credit Rating Company
   says it will downgrade U.S. credit ratings "if there is no significant
   change in its repayment ability within the period of observation."
   China is the biggest buyer of U.S. sovereign debt.

References

   1. http://www.moodys.com/

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