Obama calls new debt talks under China pressure

President Barack Obama has called a fifth day of talks with congressional leaders on the US debt © AFP Mandel Ngan

AFP

WASHINGTON (AFP) – President Barack Obama called a fifth day of talks Thursday with his Republican foes on averting an early August debt default, as largest US creditor China sounded the alarm over the impact of a possible stalemate.

Amid mounting market worries of a ruinous breakdown, and growing political acrimony over the crisis, Obama floated the possibility of moving the contentious negotiations to the storied Camp David presidential retreat, senior Democratic and Republican aides told AFP.

But Republican US House Speaker John Boehner “has told the White House he sees no need to go to Camp David this weekend,” said his spokesman Michael Steel, confirming that the White House had “discussed the possibility.”

The secluded compound, a favorite summer spot for US presidents since the 1940s, is best known as the birthplace of a 1978 Middle East peace deal agreed to there by the leaders of the United States, Israel and Egypt.

A Democratic aide earlier told AFP that moving the talks to the retreat, some 70 miles from the White House in Maryland’s Catoctin mountains, was “being discussed as an option” but that no final decision had been made.

An aide to Obama did not deny the possibility but insisted talks “for the next couple days” would stay in Washington and promised “if we have different plans, we’ll let people know,” as pressure mounted on the negotiators.

 China — Washington’s largest creditor, with an estimated $1.275 trillion in holdings — urged the United States to safeguard the interests of its investors after ratings agency Moody’s warned US debt could lose its sterling triple-A rating.

“We hope the US government adopts responsible policy and measures to ensure the interests of investors,” foreign ministry spokesman Hong Lei told reporters at a briefing.

And China’s Dagong credit ratings agency echoed Moody’s by putting US sovereign debt on downgrade watch, citing weak US economic growth and the likelihood that fiscal deficits would remain high.

Obama was to host a fifth straight day of White House talks on raising the $14.3 trillion US debt limit ahead of an August 2 deadline that could see cash-strapped Washington default or make drastic cuts to key benefits programs.

With the political temperature rising, US Treasury Secretary Tim Geithner was due to hold a midday meeting with Senate Democrats followed by a public appearance designed to pile pressure on Republicans.

Republicans, meanwhile, redoubled their calls for amending the US Constitution to require a balanced federal budget, forcing deep cuts in spending while tightening restrictions on Washington’s ability to raise taxes.

Republican Senate Minority Leader Mitch McConnell complained that Democrats “want to simply borrow and spend our nation into oblivion” and declared “if the president and Democrats in Congress won’t agree to cut back, let’s force them.”

Republicans embraced calls for fiscal discipline when Obama took office in January 2009, after years of playing down the danger of swelling US deficits and rejecting calls to pay for wars in Iraq and Afghanistan and a costly health benefit increase.

But a new opinion poll by Quinnipiac University found the US public more ready to blame Republicans than Obama by a 48 percent to 34 percent in the event the talks collapse.

The survey found 56 percent percent of Americans disapproved of Obama’s handling of the economy against 38 percent who approved, but also that more trusted him on the issue than trust Republicans, by a 45-38 percent margin.

Obama, who is seeking a second term in the November 2012 elections, garnered a 47 percent overall job approval rating, while 46 percent said they disapprove — putting him below the 50-percent mark deemed crucial for incumbents.

But that was considerably better than the approval rating for either Congress (68 percent disapproval, 28 percent approval) or Republicans (65 percent disapproval, 26 percent approval.)

And more respondents in the Quinnipiac poll blamed Obama’s predecessor, George W. Bush, for the state of the economy than they did the current president, by 54 percent to 27 percent — two and a half years after the Republican left office.

The US hit its debt ceiling on May 16 and has used spending and accounting adjustments, as well as higher-than-expected tax receipts, to continue operating without impact on government obligations, but can only do so to August 2.

Moody’s credit ratings agency sparked worldwide concern Wednesday when it placed Washington’s triple-A debt rating on a downgrade watch because of rising prospects of a stalemate.

China also expressed concern after its Dagong credit ratings agency echoed Moody’s by putting US sovereign debt on downgrade watch, citing weak US economic growth and the likelihood that fiscal deficits would remain high.

© AFP — Published at Activist Post with license