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Obama backs new plan to cut debt as talks stalemate shakes markets

With time running out for an agreement to raise the US borrowing limit, Barack Obama yesterday supported a bipartisan proposal for a new deficit-reduction plan aimed at averting a debt default.

Mr Obama said the ambitious budget plan brought forward yesterday by the "Gang of Six" group of senators could provide new ideas for breaking the impasse in Congress over raising the federal government's credit limit by August 2.

He said the proposal was broadly consistent with his approach on reducing debt and deficits. Mr Obama urged congressional leaders of both parties to start discussing it.

"My hope . . . is that they tomorrow are prepared to get down to the hard business of crafting a plan that can move this forward in time for the August 2 deadline," Mr Obama said.

Senate Budget Committee chairman Kent Conrad, one of the six senators working since December on a deficit-reduction plan, said the proposed $3.75 trillion (€2.65tn) in savings over 10 years contained $1.2tn in new revenues.

The stalemate on debt talks has shaken global markets and the situation could worsen unless a deal is struck soon.

But news of the Gang of Six plan sent 30-year bond prices sharply higher and stocks to the day's highs.

Investors also grew optimistic on evidence that Congress was acting quickly with a long-term solution to the nation's debt problems.

Irish Independent