Everyone will pay if US fails to agree, says Obama
Published 16/07/2011 | 05:00
US interest rates could rise if Congress fails to pass an increase in America's borrowing limits, effectively imposing a tax rise on all Americans, US President Barack Obama said.
"This is not just some abstract issue," he said at a news conference at the White House yesterday morning.
Mr Obama said he remained "hopeful" that the deadlock in negotiations with the Republicans could be broken and called on them to come forward with a "serious" plan which balanced spending cuts and revenue increases.
Mr Obama and Republicans traded demands for a serious deficit plan yesterday, underscoring the lack of progress and acrimony plaguing negotiations to avert a looming US government default on August 2.
Five rounds of White House talks this week produced no agreement and much partisan bickering. The talks may resume over the weekend.
House of Representatives Speaker John Boehner, the top Republican, said Mr Obama and Democrats had still not put a serious deficit plan on the table.
"Without serious spending cuts... this problem is not going to be solved," Mr Boehner said.
Congress must raise the $14.3 trillion (€10.1trn) limit on America's borrowing by August 2 or the government will run out of money to pay its bills.
Mr Obama said he had agreed to large spending cuts and wanted Republicans to accept some tax increases on wealthier Americans to help bring down America's record $1.4 trillion budget deficit. Republicans refuse.
Mr Obama said interest rates would be affected in a default, increasing costs to Americans for home and car loans and beyond. It would be, he said, "effectively a tax increase on everybody".