29 Jul 2011

US debt bill vote delayed

10:02 pm on 29 July 2011

A vote on a Republican bill to raise the US debt ceiling, cut spending and avert default has been delayed in the face of conservative resistance.

House Speaker John Boehner and Republican leaders have struggled to line up support for the measure as some conservatives have said it does not do enough to cut spending.

A vote on the bill was postponed for a few hours late on Thursday, but

Republican representative Kevin McCarthy eventually told reporters there would be no vote on Thursday evening.

Even if passed, however, the bill would then go to the Democratic-controlled Senate, where Majority Leader Harry Reid said it would be defeated.

Republicans and Democrats have been deadlocked for weeks in their negotiations about how best to reduce the US deficit, and over what period, blocking an agreement so far to allow the raising of the $US14.3 trillion debt ceiling.

The White House has continued to push for a plan that would win approval from both parties.

A failure to raise the debt limit by 2 August could trigger a crippling default that would shake the global financial system and could tip the United States back into recession.

While many are predicting an eleventh-hour deal, the risk remains for a downgrade of the United States' top-notch credit rating, a move that would raise US borrowing costs and rattle global investors.

International Monetary Fund chief Christine Lagarde says failure to raise the American debt limit could undermine the US dollar's status as the world's prime reserve currency.

She warned the value of the US dollar could decline if an agreement is not reached.

White House spokesman Jay Carney said the debt stalemate had already had significant negative impact on the economy.

"The American people have made clear they want a compromise," he said. "Our primary objective has to be to protect the economy and the American people from economic harm."