Obama pushes for '11th hour' debt deal

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US President Barack Obama urged polarized lawmakers to find an "11th hour" deal to avert a calamitous early August debt default and heaped praise on a newly unveiled bipartisan budget plan.

Obama cited "some progress" in talks with Democratic and Republican leaders of the Senate and House of Representatives on raising the US debt ceiling, but warned time was running out to forge a broad deficit-cutting compromise.

"The problem we have now is, we're in the 11th hour, and we don't have a lot more time left," he said in a hurriedly announced public appearance at the White House on Tuesday, noting plans for a fresh round of negotiations on Wednesday.

Washington hit its debt ceiling on May 16 and has used spending and accounting adjustments, as well as higher-than-expected tax receipts, to continue operating normally, but can only do so until August 2.

Finance and business leaders have warned that failure to raise the US debt ceiling by then could send shock waves through a world economy still reeling from the 2008 collapse, while Obama has predicted economic "Armageddon."

Obama highlighted a new plan by a bipartisan "Gang of Six" senators that aims to slash the swollen US budget deficit by some $3.7 trillion over 10 years and boost revenues $1 trillion by closing tax loopholes and ending some tax breaks.

 The president called the framework "broadly consistent" with his call to cut spending including on the US military, overhaul cherished social safety net programs, and raise taxes on the rich to ensure "shared sacrifice."

Obama said he would call up top congressional leaders, after a House vote late in the day, to set up a new round of White House negotiations and expressed hope for a breakthrough "in these next couple of days."

"We don't have any more time to engage in symbolic gestures, we don't have any more time to posture; it's time to get down to the business of actually solving this problem," he warned.

And Obama hedged heavily against the notion that the "Gang of Six" proposal, which faced high congressional hurdles, offered a clear and easy path through angry partisan politics to a deal on raising the debt ceiling.

"Just because we might agree in principle with a range of issues with six senators, or seven senators, that doesn't get us out of the House of Representatives, that doesn't get us out of the Senate," he said.

"There's going to have to be a broader agreement on the part of all the leadership that we're going to get this done in a serious way," he said, underlining that "it will be hard, it will be tough."

US stocks closed sharply higher with a boost from Obama's announcement. The Dow Jones Industrial Average gained 202 points, or 1.6 percent, helped by strong company results but also nudged by signs a debt deal might be near.

Later, in a largely symbolic move, the House voted 234-190 to approve a Republican plan, backed by allies of the archconservative "Tea Party" movement, to require drastic spending cuts in return for raising the debt limit.

And it ties any increase in the debt ceiling to securing the two-thirds majorities needed in each chamber to send an amendment to the US Constitution requiring a balanced federal budget to the states for ratification.

Obama noted that the so-called "Cut, Cap, and Balance" plan was dead on arrival in the Democratic-held Senate and that he would veto it, making it a political gesture to appeal to conservatives.

Earlier, Republican House Speaker John Boehner said he was working on a "Plan B" to avert default.

"I'm not going to give up hope on 'Cut, Cap and Balance,' but I do think it's responsible for us to look at what Plan B would look like," Boehner said, citing "a lot of options available" but stressing "no decision" had been made.

Obama cited a "fail-safe" plan being crafted by Republican Senate Minority Leader Mitch McConnell and Democratic Senate Majority Leader Harry Reid to let the president raise the debt ceiling with just Democratic votes.

"In the event that we don't get an agreement, at minimum we've got to raise the debt ceiling," he said.

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