July 19, 2011 New plan offers hope for debt talk progress
Washington, A bipartisan group of senators offered an ambitious plan on Tuesday that could revive stalled U.S. debt talks and the prospect of a long-term deficit reduction deal to avert a default by the United States.
With just two weeks left until the federal government runs out of money to pay all of its bills, President Barack Obama seized on the "Gang of Six" plan as a "very significant step" and urged congressional leaders to start discussing it.
"My hope ... is that they tomorrow are prepared to start talking turkey and actually getting down to the hard business of crafting a plan that can move this forward in time for the August 2nd deadline," Obama said.
The U.S. government will default on its obligations by that date if Congress does not allow the Treasury to sell more debt. That could force the U.S. economy back into recession and wreak havoc on global financial markets.
White House talks on a comprehensive deficit reduction deal have stalled over tax increases, which Republicans oppose. Obama, a Democrat, said he hoped the "Gang of Six" proposal -- which would require each party to ease back from entrenched positions -- could help form the basis of an agreement.
A broad deficit reduction package would clear the way for Congress to approve an increase in the $14.3 trillion federal debt ceiling. A backup plan by Senate Republican leader Mitch McConnell has gained momentum as a way to raise the ceiling and may end up incorporating parts of the "Gang of Six" proposal.
Senate Budget Committee Chairman Kent Conrad, one of the six Democratic and Republican senators who have been working since December on a deficit reduction plan, said the proposed $3.75 trillion in savings over 10 years contains $1.2 trillion in new revenues.
'11TH HOUR'
Obama's decision to speak to reporters about the "Gang of Six" plan even before he had fully read it showed the sense of crisis that is enveloping Washington as the clock ticks toward the August deadline.
"The problem we have now is we're in the 11th hour and we don't have a lot more time left," the president said.
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