Democrats meet with Obama on deficit

WASHINGTON — House Democrats met with President Barack Obama for talks on cutting the deficit Thursday as the White House pushed back against calls from Republicans for Obama to show more leadership and offer more specifics on the issue.

"We are at a point now where we don't need new plans," said presidential spokesman Jay Carney, arguing that Obama has already offered one. "We need to find common ground around the shared goal of significant deficit reduction."

Carney also shrugged off House Speaker John Boehner's offer to negotiate directly with the president to speed things along. Boehner said Wednesday that negotiations being led by Vice President Joe Biden aren't making fast enough progress and said he was willing to get involved directly with Obama.

The Biden talks with a small group of lawmakers from both parties are aimed at identifying spending cuts in the trillions of dollars that Republicans are demanding as the price for their vote to raise the government's borrowing limit. If the limit is not raised by Aug. 2, the Treasury Department is predicting unprecedented default on U.S. obligations and an ensuing economic calamity. But the Biden group doesn't meet again until Thursday.

Also Thursday, Treasury Secretary Timothy Geithner made an appeal to House Republican freshmen, armed with fresh evidence of Wall Street's increasing pessimism over prospects for a quick resolution to the standoff over government debt.

Treasury officials have said they can use a series of maneuvers to continue most government functions until early August, but then would face a default on federal obligations leading to likely economic upheaval.

However, some of the 87 House GOP freshmen, a staunchly conservative and strong-willed group, have publicly questioned Geithner's warnings. Dubbed by some as debt ceiling "deniers," they doubt a failure to lift the borrowing cap would force a default or lead to unpredictable results in financial markets, as Geithner has argued.

House leaders have quietly assured Wall Street that they intend to raise the limit. Boehner said Wednesday that he believed a deal would be reached within a month.

Sterling debt rating in jeopardy

A credit rating agency is warning the U.S. government that it could lose its sterling debt rating if Congress and the Obama administration don't reach an agreement to raise the nation's borrowing limit. Moody's Investors Service said Thursday that if the parties fail to make progress soon, it would put the U.S. rating under review for a possible downgrade. That's because there's a "very small but rising risk" that the government will default on its debts. Standard & Poor's, another major credit rating agency, issued a similar warning in April. A lower credit rating could ripple through the U.S. economy and ultimately hurt consumers. That's because many loans, including mortgages, tend to follow yields on U.S. Treasury bonds. So interest rates could rise.

Democrats meet with Obama on deficit 06/02/11 [Last modified: Friday, June 3, 2011 12:25am]

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