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US Senate Scraps Vacation Amid Debt Deadlock

The US Senate on Thursday scrapped its annual weeklong July 4 break as the White House warned that deadlocked talks on raising the government’s ability to borrow money had breached a “danger zone.”

As still-sour jobless claims cast fresh doubt on prospects for a US recovery, senior White House adviser David Plouffe warned that failure to raise the congressionally set US debt ceiling would have “catastrophic consequences.”

“We are in the danger zone now,” Plouffe told NBC television, amid seemingly dwindling hopes that talks between President Barack Obama and his Republican foes would yield a plan to cut the deficit while green-lighting more borrowing.

His comments came as official figures showed new weekly jobless benefits claims were virtually unchanged at 428,000, as the US economy struggled after emerging from the worst slump since the Great Depression of the 1930s.

“The person who’s least satisfied with where the economy is today is President Obama,” Plouffe said.

With time for a deal quickly ebbing, Democratic Senate Majority Leader Harry Reid announced that the chamber would scrap its yearly break for the July 4 US Independence Day holiday, returning to work on Tuesday.

“The obstacle is too steep, and the time too short, to waste even a moment,” said Reid. “There’s still so much to do to put Americans back to work, to cut our deficit, and get our economy back to work.”

Reid told reporters that Senate Democrats would meet next Wednesday and Thursday with top Obama advisers including Gene Sperling, director of the White House’s National Economic Council.

The Obama administration has warned that, if lawmakers fail to raise the country’s $14.29 trillion debt ceiling by August 2, the US government could default on its debt payments and be forced to withhold payments like Social Security checks to retirees.

The feuding came amid seemingly shrinking likelihood that negotiations between Obama and his Republican foes would reach a breakthrough deal to rein in the galloping US deficit in the weeks remaining.

Republicans have demanded spending cuts at least equal to the amount of the increase in Washington’s ability to borrow while flatly refusing to raise taxes, which they say would smother job growth.

Obama and his Democratic allies have broadly agreed on spending cuts but insisted on the need for tax increases on the richest Americans as part of a “balanced approach” to closing the yawning gap between revenues and outlays.

Republican Senate Minority Leader Mitch McConnell said Obama should “come to the Capitol today to meet with Senate Republicans” in order to “hear directly” their opposition to his approach.

The White House quickly rejected the invitation, which seemed designed to embarrass the president over his plans to head to Philadelphia for a political fundraiser.

“What the senator invited the president to do was to hear Senate Republicans restate their maximalist position,” White House spokesman Jay Carney said.

“We know what that position is. And he also invited the president to hear what would not pass. That’s not a conversation worth having. What we need to have is a conversation about what will pass.”

Carney noted that Obama had met McConnell at the White House earlier this week, had seen Republican House speaker John Boehner twice last week, and said lower level talks were still going on between the White House and Republicans.

Republicans jostling for the party’s nomination to take on Obama in November 2012 elections have hammered the president over historically high unemployment, the top issue on voters’ minds and his most glaring political vulnerability.

As the debate raged in Washington, former US president Bill Clinton told ABC television that the two sides should commit to cut spending and raise taxes but agree to hold off “until we’ve got this recovery underway.”

Clinton, who left office with a soaring government surplus, said “now is not the time” for either tax hikes or deep spending cuts.

“What I’d like to see them do is agree on the outlines of a 10-year plan and agree not to start either the revenue hikes or the spending cuts until we’ve got this recovery underway,” Clinton added.

Copyright © 2011 AFP

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