The nation faces an August 2 deadline to boost its $14.3 trillion
debt ceiling. Analysts have warned that even a short-term extension of
the borrowing limit could still result in market turmoil. Standard
& Poor's has placed the odds of a U.S. credit rating downgrade,
resulting in higher interest rates and rattling investor confidence, at
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Obama is "absolutely" still actively involved in debt-ceiling
negotiations with Congress, Treasury Secretary Timothy Geithner said on
Sunday morning, as Washington dashes to avert a financial crisis
brought on by defaulting on its credit.
Geithner laid out two paths: a two-tiered approach involving a
savings package followed by a tax code and entitlement reform, and
another option that hews to the "grand bargain" that Obama and Boehner
had been hashing over before talks fell apart late on Friday.
Appearing on CNN's State of the Union, Geithner said Obama
had remained engaged with congressional leaders on Saturday, even after
the public talks had shifted to congressional leaders in the Capitol.
"Both sides are getting a lot closer," Geithner said.
Investor confidence, Geithner said, "will start to erode the longer we wait."
Asked by CNN's Candy Crowley whether that erosion could begin to
occur today, when Asian markets open in the afternoon, the secretary
replied, "You can't tell."
There were signs of progress late on Saturday: Both Democrats and
Republicans say they are prepared to accept a two-step process for
cutting the federal deficit by up to $3 trillion, but are at odds over
whether the debt limit should be in one step that gets past the
November 2012 election, or in two increments.
Boehner is pushing a plan that would raise the debt ceiling by $3
trillion or more in two steps or tranches, with both debt-ceiling
increases allowed only if matching spending cuts are identified. The
total of $3 trillion or more in cuts, through two steps of $1.5
trillion or more, is the plan Boehner suggested on a call Saturday with
House Republicans, congressional aides in both parties said.
On Fox, Boehner said talks had fallen apart after Obama repeatedly
demanded $400 billion in new revenues over 10 years, tacked onto an
agreement of $800 billion in new revenue through what Boehner termed a
"flatter, fairer" tax code. Boehner said his $800 billion offer was
still on the table.
Image credit: John Boehner, Facebook