11 Oct 2013

Republicans meet Obama over US debt offer

3:07 pm on 11 October 2013

Republicans in the US House of Representatives have met President Barack Obama to discuss a deal to avert a looming debt crisis, but negotations appeared to remain up in the air.

House Speaker John Boehner and other top Republican representatives spent one and a half hours talking with Mr Obama.

The White House issued a statement calling it a "good meeting". The statement said Mr Obama, a Democrat, looked forward to making continued progress with both Republicans and Democrats.

House Republican majority leader Eric Cantor told reporters groups of negotiators on both sides would talk into the night.

Mr Obama has repeatedly declared his willingness to negotiate with Republicans - but only after the House passes a clean bill to raise the debt ceiling and another bill to end the 10-day government closure, DPA reports.

Without a resolution, the government will reach its borrowing limit on or about 17 October, when it will have to default on bond payments held by international and domestic investors. Many entitlements such as medical care for the poor and aged and social security would suffer, the administration has said.

Hopes for a temporary solution had been raised earlier when Republicans proposed a short-term increase in the debt ceiling in exchange for a promise from Mr Obama to hold a "meaningful dialogue" about budget and spending issues.

Representative Cathy McMorris Rogers, a member of the top Republican leadership in the House of Representatives, gave the details of the Republican proposal at a press conference.

She said the Republican leadership would offer legislation that "will offer a temporary increase in the debt ceiling to allow us some time, because it is time for solutions".

The talks at the White House occurred late on Thursday after Obama invited the entire Republican membership in the House - 232 members - but Mr Boehner rejected the offer.

White House spokesman Jay Carney said Obama was happy that "cooler heads" seem to be prevailing, but that the president believed it would be better to raise the debt ceiling for an "extended period of time" rather than a short period.

Earlier on Thursday, Treasury Secretary Jacob Lew warned a Senate hearing that "irrevocable damage "would result if the federal government defaults on is obligations for the first time in history. He said it would be deeply damaging to financial markets and undermine already sluggish US economic recovery.

World Bank President Jim Yong Kim said a default, even a near miss, would be particularly harmful to developing countries.

Major US stock indexes posted their strongest rally in more than nine months on Thursday after signs of progress in negotiations. The market rally left the S&P 500 less than 2% away from its record closing high set three weeks ago.